Larrobis, Jr vs Philippine Veterans Bank Facts: Petitioner spouses contracted a monetary loan with respondent Philippine Veterans Bank,

evidenced by a promissory note, due and demandable on February 27, 1981, and secured by a Real Estate ort!a!e e"ecuted on their lot to!ether with the improvements thereon. On March 23, 1985, the respondent bank went bankrupt and was placed under receivership#li$uidation by the %entral Bank from April 25, 1985 until Au u!t 1992. On Au u!t 23, 1985, the bank, throu!h Francisco &o, sent the spouses a demand letter which pertains to the insurance premiums advanced by respondent bank over the mort!a!ed property o' petitioners. On Au u!t 23, 1995, more than fourteen year! from the time the loan became due and demandable, respondent bank 'iled a petition 'or e"tra(udicial 'oreclosure o' mort!a!e o' petitioners) property. On October 18, 1995, the property was sold in a public auction by *heri'' +rthur %abi!on with Philippine Veterans Bank as the lone bidder. On April 2", 199", petitioner! filed a complaint #ith the $%&, &ebu &ity, to declare the e'tra()udicial foreclo!ure and the !ub!e*uent !ale thereof to re!pondent ban+ null and ,oid. On April 17, 1998, the $%& di!mi!!ed the complaint on the round that defendant ban+ #a! placed under recei,er!hip by the &entral -an+ from April 1985 until 1992. %he defendant ban+ #a! i,en authority by the &entral -an+ to operate a! a pri,ate commercial ban+ and became fully operational only on Au u!t 3, 1992. From April 1985 until .uly 1992, defendant ban+ #a! re!trained from doin it! bu!ine!!. ,he de'endant bank)s ri!ht to 'oreclose the mort!a!ed property prescribes in ten -./0 years but such period was interrupted when it was placed under receivership1 Article 115/ of the 0e# &i,il &ode to thi! effect pro,ide!1 2%he period durin #hich the obli ee #a! pre,ented by a fortuitou! e,ent from enforcin hi! ri ht i! not rec+oned a ain!t him.2 2ssue: 3hether or not the period #ithin #hich the re!pondent ban+ #a! placed under recei,er!hip and li*uidation proceedin ! may be con!idered a fortuitou! e,ent #hich interrupted the runnin of the pre!cripti,e period in brin in action!. 3eld: $e!pondent4! claim! that becau!e of a fortuitou! e,ent, it #a! not able to e'erci!e it! ri ht to foreclo!e the mort a e on petitioner!4 property5 and that !ince it #a! banned from pur!uin it! bu!ine!! and #a! placed under recei,er!hip from April 25, 1985 until Au u!t 1992, it could not foreclo!e the mort a e on petitioner!4 property #ithin !uch period !ince foreclo!ure i! embraced in the phra!e 2doin bu!ine!!,2 are #ithout merit. 4hile it is true that 'oreclosure 'alls within the broad de'inition o' 5doin! business,5 that is: 6a continuity o' commercial dealin!s and arran!ements and contemplates to that e"tent, the per'ormance o' acts or words or the e"ercise o' some o' the 'unctions normally incident to and in pro!ressive prosecution o' the purpose and ob(ect o' its or!ani7ation1 it should not be considered included, however, in the acts prohibited whenever banks are 5prohibited 'rom doin! business5 durin! receivership and li$uidation proceedin!s1 %hi! #e made clear in -anco Filipino 6a,in ! 7 Mort a e -an+ ,!. Monetary -oard, &entral -an+ of the 8hilippine! 2/ #here #e e'plained that1 6ection 29 of the $epublic Act 0o. 2"5, a! amended +no#n a! the &entral -an+ Act, pro,ide! that #hen a ban+ i! forbidden to do bu!ine!! in the 8hilippine! and placed under recei,er!hip, the per!on de!i nated a! recei,er !hall immediately ta+e char e of the ban+4! a!!et! and liabilitie!, a! e'peditiou!ly a! po!!ible, collect and ather all the a!!et! and admini!ter the !ame for the benefit of it! creditor!, and repre!ent the ban+ per!onally or throu h coun!el a! he may retain in all action! or proceedin ! for or a ain!t the in!titution, e'erci!in all the po#er! nece!!ary for the!e purpo!e! includin , but not limited to, brin in and foreclo!in

mort a e! in the name of the ban+. And in 8ro,ident 6a,in ! -an+ ,!. &ourt of Appeal!, #e further !tated that1 3hen a ban+ i! prohibited from continuin to do bu!ine!! by the &entral -an+ and a recei,er i! appointed for !uch ban+, that ban+ #ould not be able to do ne# bu!ine!!, i.e., to rant ne# loan! or to accept ne# depo!it!. 9o#e,er, the recei,er of the ban+ i! in fact obli ed to collect debt! o#in to the ban+, #hich debt! form part of the a!!et! of the ban+. %he recei,er mu!t a!!emble the a!!et! and pay the obli ation of the ban+ under recei,er!hip, and ta+e !tep! to pre,ent di!!ipation of !uch a!!et!. +ccordin!ly, the receiver o' the bank is obli!ed to collect pre8e"istin! debts due to the bank, and in connection therewith, to 'oreclose mort!a!es securin! such debts1 %hi! i! con!i!tent #ith the purpo!e of recei,er!hip proceedin !, i.e., to recei,e collectible! and pre!er,e the a!!et! of the ban+ in !ub!titution of it! former mana ement, and pre,ent the di!!ipation of it! a!!et! to the detriment of the creditor! of the ban+. :t i! not di!puted that 8hilippine ;eteran! -an+ #a! placed under recei,er!hip by the Monetary -oard of the &entral -an+ by ,irtue of $e!olution 0o. 3"/ on April 25, 1985, pur!uant to 6ection 29 of the &entral -an+ Act on in!ol,ency of ban+!. ,here is also no truth to respondent)s claim that it could not continue doin! business 'rom the period o' +pril .9:; to +u!ust .99<, the time it was under receivership1 +s correctly pointed out by petitioner, respondent was even able to send petitioners a demand lette r, throu h Franci!co <o, on Au u!t 23, 1985 for 2account! recei,able in the total amount of 8",3/5.== a! of Au u!t 15, 198/2 for the in!urance premium! ad,anced by re!pondent ban+ o,er the mort a ed property of petitioner!. 9o# it could !end a demand letter on unpaid in!urance premium! and not foreclo!e the mort a e durin the time it #a! 2prohibited from doin bu!ine!!2 #a! not ade*uately e'plained by re!pondent. A! #e held in 8hilippine ;eteran! -an+ ,!. 0>$&, a labor ca!e #hich al!o in,ol,ed re!pondent ban+, all the acts o' the receiver and li$uidator pertain to petitioner, both havin! assumed petitioner)s corporate e"istence1 8etitioner cannot di!claim liability by ar uin that the non(payment of MO>:0A4! )u!t #a e! #a! committed by the li*uidator! durin the li*uidation period. 3" 9o#e,er, the ban+ may o after the recei,er #ho i! liable to it for any culpable or ne li ent failure to collect the a!!et! of !uch ban+ and to !afe uard it! a!!et!. Lipana vs1 =evelopment Bank o' the Philippines &1R1 >o1 ?@::A, *eptember <A, .9:? Facts: Petitioners opened and maintained both time and savings deposits with the respondent Development Bank of Rizal. When some of the time deposit certificates matured, petitioners were not able to cash them but instead were issued a manager's check which was dishonored upon presentment. Demands for the pa ment of both time and savings deposits have failed. !ence, petitioners filed with the R"# a collection suit with pra er for issuance of a writ of preliminar attachment which was granted b the court. "he R"# rendered $udgment in favor of petitioners. %eanwhile, the %onetar Board placed the respondent bank under receivership. &ubse'uentl , the motion for e(ecution pending appeal filed b petitioners was granted b the court but was also sta ed b the trial $udge. "he motion filed b petitioners to lift the sta order having been denied, this petition was filed.

2ssue: 3hether or not re!pondent )ud e could le ally !tay e'ecution of )ud ment that ha! already become final and e'ecutor Held: )es. Petition dismissed. *fter the %onetar Board has declared that a bank is insolvent and has ordered it to cease operations, the Board becomes the trustee of its assets for the e'ual benefit of all the creditors, including depositors. "he assets of the insolvent banking institution are held in trust for the e'ual benefit of all creditors, and after its insolvenc , one cannot obtain an advantage or a preference over another b an attachment, e(ecution or otherwise. "o e(ecute the $udgment would undul deplete the assets of respondent bank to the obvious pre$udice of other depositors and creditors. Philippine Veterans Bank vs1 >LR% ?<.$. 0o.13=/39. October 2", 1999@ Facts: :n 1983, petitioner 8hilippine ;eteran! -an+ #a! placed under recei,er!hip by the &entral -an+ Ano# -an +o 6entralB. 8etitioner #a! !ub!e*uently placed under li*uidation on 15 .une 1985. &on!e*uently, it! employee!, includin pri,ate re!pondent Cr. .o!e %eodorico ;. Molina, #ere terminated from #or+ and i,en their re!pecti,e !eparation pay and other benefit!. %o a!!i!t in the li*uidation, !ome of petitioner4! former employee! #ere rehired, amon them Molina, #ho!e re(employment commenced on 15 .une 1985. On 11 May 1991, MO>:0A filed a complaint a ain!t member! of the li*uidation team. %he complaint demanded the implementation of 3a e Order! 0o!. 0&$(=1 and 0&$(=2 Ahereafter 3.O. 1 and 3.O. 2B a! #ell a! moral dama e! and attorney4! fee! in the amount of 83==,===. Mean#hile, 3.O. 1 too+ effect on 0o,ember 199=, pre!cribin a 817(increa!e in the daily #a e of employee! #ho!e monthly !alary did not e'ceed 83,8=2.=8. On the other hand, 3.O. 2 became mandated a 812(increa!e in the daily #a e of employee! #ho!e monthly !alary did not e'ceed 8/,319.1". Molina claimed that hi! !alary !hould ha,e been ad)u!ted in compliance #ith !aid #a e order!. %he li*uidation team countered that MO>:0A #a! not entitled to any !alary increa!e becau!e he #a! already recei,in a monthly !alary of 8","5/."=. >abor Arbiter re)ected the 2".1" factor u!ed by the li*uidator! in computin the daily #a e of MO>:0A, adoptin in!tead the factor of D3"5 day!.E &on!e*uently, they #ere ordered to pay Molina the #a e differential! due him under 3.O. 1 and 3.O. 2. On appeal, the 0>$& !u!tained the labor arbiter4! rulin after concludin that Molina #a! a re ular employee of petitioner #ith a ba!ic monthly !alary of 83,75/."= at the time of hi! di!mi!!al on 31 .anuary 1992. 9e #a!, therefore, entitled to the #a e increa!e! mandated by the afore!aid #a e order!. 2ssue: 3hether Molina i! entitled to #a e increa!e computation that u!ed the 3"5 day! factor. *% Rulin!:

Molina i! entitled to the #a e increa!e computation u!in the 3"5 day! a! factor. %he document! attached !ho# that the -an+ ha! been con!i!tently u!in the factor of 3"5 day! in computin your e*ui,alent monthly !alary prior to it! bein placed under recei,er!hip by the &entral -an+. %hi! i! e,ident in the #a e and allo#ance increa!e! ranted under pre,iou! 8re!idential Cecree! and 3a e Order!, #hich #ere i,en by the -an+ on monthly ba!i!, i.e., #here the re!t day! are un#or+ed but paid. %hi! i! al!o indicated in the appointment and !er,ice record! of ban+ per!onnel #ho !tarted out a! daily paid employee! and #ere e,entually promoted a! permanent employee! #ith fi'ed monthly !alarie!. 9o#e,er, #hen $.A. ""/= #ent into force, the -an+ unilaterally reduced the factor to 2"2 in!tead of maintainin factor 3"5 a! #a! the practiceFpolicy lon before the effecti,ity of the Act. And #hen $.A "727 too+ effect, the -an+ re,erted to the old practiceFpolicy of u!in factor 3"5 day! in computin your e*ui,alent monthly rate !alary. May #e add that the old practice of the ban+ in u!in factor 3"5 day! in a year in determinin e*ui,alent monthly !alary cannot unilaterally be chan ed by your employer #ithout the con!ent of the employee!, !uch practice bein no# a part of the term! and condition! of your employment. An employment a reement, #hether #ritten or un#ritten, i! a bilateral contract and a! !uch either party thereto cannot chan e or amend the term! thereof #ithout the con!ent of the other party thereto. :t i! clear that re!pondent i! entitled to the #a e increa!e under $.A. "//= computed on the ba!i! of 3"5 paid day! and to the corre!pondin !alary differential! a! a re!ult of the application of thi! factor. G,idently, the u!e of the 3"5 factor i! bindin and conclu!i,e, formin a! it did part of the employment contract. %o abandon !uch policy and re,ert to it! old practice of u!in the 2".1" factor #ould be a diminution of a labor benefit, #hich i! prohibited by the >abor &ode. :t cannot be doubted that the 3"5 factor fa,or! petitioner4! employee! becau!e it re!ult! in a hi her determination of their monthly !alary.
Provident *avin!s Bank v1 %ourt o' +ppeals, <<< *%R+ .<; -.99@0 F+%,* On 1" February 19"7, the !pou!e >orenHo I. <uarin and >i#ay#ay .. <uarin A<uarin!B obtained a loan from pro,ident ban+ in the amount of 8"2, 5==.== payable on or before 2= .une 19"7. A! !ecurity for the loan, they e'ecuted a real e!tate mort a e in fa,or of pro,ident ban+ o,er aparcel of land. :n 6eptember, 1972, pro,ident ban+ #a! placed under recei,er!hip by the &entral -an+ of the 8hilippine! until 27 .uly 1981 #hen the recei,er!hip #a! !et a!ide by the 9onorable 6upreme &ourt. On 1= .uly 198", the <uarin! and re!pondent 3il!on &hua e'ecuted a Ceed of Ab!olute 6ale 3ith A!!umption of Mort a ed #hereby the <uarin! !old the mort a ed property to <uarin! !old the appellant for the !um of 825=,===.== and plaintiff(appellant undertoo+ to a!!ume the mort a ed obli ation of the <uarin! #ith defendant(appellant #hich a! of 15 February 1985 amounted to 8591,=88.8= 3il!on &hua #rote to 8ro,ident ban+ that the former had purcha!ed the mort a ed property from the <uarinJ! and re*ue!tin that the o#nerJ! copy of %&% in the po!!e!!ion of defendant(appellant be relea!ed to him !o that he can re i!ter the !ale and ha,e the title to the property tran!ferred in hi! name. 9e li+e#i!e, informed defendant(appellant that it had lo!t #hate,er ri ht or action had a ain!t the <uarin! becau!e of pre!cription. ACefendant( replied on 1= Au u!t 1987 !tatin the rea!on! #hy they could not comply #ith plaintiff(appellantJ! demand! 8ro,ident ban+ ar ue! that the pre!cripti,e period #a! !u!pended due to the prohibition Dto do bu!ine!!E i!!ued by the Monetary -oard. 2**BE

3hether a foreclo!e proceedin fall! #ithin the pur,ie# of the phra!e 2doin bu!ine!!2K 3hether the pre!cripti,e period for the morta e #a! !u!pendedK RBL2>& CE* to both1 Coin bu!ine!! mean! Da continuity of commercial dealin ! and arran ement!, and contemplate! to that e'tent, the e'erci!e of !ome of the #ord! or the normally incident to, and in pro re!!i,e pro!ecution of, the purpo!e and ob)ect of it! or aniHation!.E 3ith ban+! it al!o in,ol,e! the collection of debt! and foreclo!ure of mort a e!. <enerally, an appointment of a recei,er doe! not di!!ol,e the corporation nor doe! it interfere #ith the e'erci!e of it! corporate ri ht!. -ut thi! principle! i!, of cour!e, applicable to a !ituation #here there i! no re!traint impo!ed on the corporation, unli+e in the ca!e at bar #here petitioner 8ro,ident 6a,in ! -an+ #a! !pecifically forbidden and immobiliHed from doin bu!ine!! in the 8hilippine! on 6eptember 15, 1972 1981 #hen the deci!ion in &entral -an+ ,!. &ourt of Appeal! #a! rendered. 9a,in arri,ed at the conclu!ion that the foreclo!ure i! part of ban+J! bu!ine!! acti,ity #hich could not ha,e been pur!ued by the recei,er then becau!e of the circum!tance! di!cu!!ed in the &entral -an+ ca!e, #e are thu! con,inced that the pre!cripti,e period #a! le ally interrupted by fuerHa mayor in 1972 on account on the prohibition impo!ed by the Monetary -oard a ain!t petitioner from tran!actin bu!ine!!, until the directi,e of the board #a! nullified in 1981. :ndeed, the period durin #hich the obli ee #a! pre,ented by a ca!o fortuito from enforcin hi! ri ht i! not rec+oned a ain!t him AArticle 115/, 0e# &i,il &odeB. 3hen pre!cription i! interrupted, all the benefit! ac*uired !o far from the po!!e!!ion cea!e and #hen pre!cription !tart! ane#, it #ill be entirely a ne# one. Al!o #hen re!pondent #rote to the <uarin! re*ue!tin that the former be allo#ed to pay off the loan of the mort a e, he in turn ac+no#led ed the e'i!tin debt thereby !u!pendin the pre!cripti,e period for the !econd time.

Fidelity *avin!s and ort!a!e Bank vs %en7on Cate1 April 5, 199= 8etitioner1 Fidelity 6a,in ! and Mort a e -an+ $e!pondent!1 9on 8edro &enHon and 6pou!e! %imoteo and Olimpia 6antia o 8onente1 $e alado Facts: 8ri,ate re!pondent! in!tituted thi! pre!ent action for a !um of money #ith dama e! a ain!t Fidelity 6a,in ! and Mort a e -an+, &entral -an+ of the 8hilippine!, Gu!ebio >opeH, .r., Ar!enio M. >opeH, 6r., Ar!enio 6. >opeH, .r., -ibiana G. >acuna, .o!e &. Morale!, >eon 8. &u!i, 8ilar L. 8obre(&u!i and Grnani A. 8acana. %he court di!mi!!ed the complaint a! a ain!t &entral -an+ of the 8hilippine!, Gu!ebio >opeH, .r., Ar!enio 6. >opeH, .r., Ar!enio M. >opeH, 6r. and -ibiana 6. >acuna. %he pri,ate re!pondent! depo!ited #ith the Fidelity 6a,in ! -an+ the amount of 85=,=== A!a,in ! accountB. Al!o, pri,ate re!pondent! depo!ited another 85=,=== under &ertificate of %ime Cepo!it 0o. =21=. %he Monetary -oard found the ban+ in!ol,ent and i!!ued $e!olution 0o. 35=, AaB forbiddin to do bu!ine!! in the 8hilippine! and AbB in!tructin the Actin 6uperintendent of -an+! to ta+e char e of the a!!et!. %he 8C:& paid the pri,ate re!pondent! 81=,=== on the a re ate depo!it! of 81==,===. %he M- later i!!ued it! $e!olution 0o. 212/ directin the li*uidation of the affair! of the ban+. %he li*uidation proceedin i! pre!ently pendin in the &F: of Manila. 2ssue: 3O0 an in!ol,ent ban+ may be ad)ud ed to pay intere!t on unpaid depo!it! e,en after it! clo!ure by the &entral -an+ by rea!on of in!ol,ency #ithout ,iolatin the pro,i!ion! of the &i,il &ode on preference of credit!

3eld: 0o Ratio: :t i! !ettled )uri!prudence that a ban+in in!titution #hich ha! been declared in!ol,ent and !ub!e*uently ordered clo!ed by the &entral -an+ of the 8hilippine! cannot be held liable to pay intere!t on ban+ depo!it! #hich accrued durin the period #hen the ban+ i! actually clo!ed and non(operational. %he O,er!ea! -an+ of Manila ,!. &A1 2:t i! a matter of common +no#led e, #hich 3e ta+e .udicial notice of, that #hat enable! a ban+ to pay !tipulated intere!t on money depo!ited #ith it i! that thru the other a!pect! of it! operation it i! able to enerate fund! to co,er the payment of !uch intere!t. Mnle!! a ban+ can lend money, en a e in international tran!action!, ac*uire foreclo!ed mort a ed propertie! or their proceed! and enerally en a e in other ban+in and financin acti,itie! from #hich it can deri,e income, it i! inconcei,able ho# it can carry on a! a depo!itory obli ated to pay !tipulated intere!t. &on,entional #i!dom dictate! thi! ine'orable fair and )u!t conclu!ion. And it can be !aid that all #ho depo!it money in ban+! are a#are of !uch a !imple economic propo!ition. &on!e*uently, it !hould be deemed read into e,ery contract of depo!it #ith a ban+ that the obli ation to pay intere!t on the depo!it cea!e! the moment the operation of the ban+ i! completely !u!pended by the duly con!tituted authority, the &entral -an+.2 8etitioner cannot be held liable for intere!t on ban+ depo!it! #hich accrued from the time it #a! prohibited by the &entral -an+ to continue #ith it! ban+in operation!, that i!, #hen $e!olution 0o. 35= to that effect #a! i!!ued on February 18, 19"9. %he order, therefore, of the &entral -an+ a! recei,erFli*uidator of petitioner ban+ allo#in the claim! of depo!itor! and creditor! to earn intere!t up to the date of it! clo!ure on February 18, 19"9, i! in line #ith the doctrine laid do#n in the )uri!prudence abo,e cited. :!!ue1 3O0 an in!ol,ent ban+ may be ad)ud ed to pay moral and e'emplary dama e!, attorneyJ! fee! and co!t! #hen the in!ol,ency i! cau!ed by the anomalou! real e!tate tran!action! #ithout ,iolatin the pro,i!ion! on preference of credit!. 9eld1 0o $atio1 %he trial court found, and it i! not di!puted, that there #a! no fraud or bad faith on the part of petitioner ban+ and the other defendant! in acceptin the depo!it! of pri,ate re!pondent!. %he ban+ could not e,en be faulted in not immediately returnin the amount claimed by pri,ate re!pondent! con!iderin that the demand to pay #a! made and &i,il &a!e 0o. 8/8== #a! filed in the trial court !e,eral month! after the &entral -an+ had ordered petitionerJ! clo!ure. -y that time, the ban+ #a! no lon er in a po!ition to comply #ith it! obli ation! to it! creditor!, includin herein pri,ate re!pondent!. G,en the trial court had to admit that the ban+ failed to pay pri,ate re!pondent! becau!e it #a! already in!ol,ent. Further, thi! ca!e i! not one of the !pecified or analo ou! ca!e! #herein moral dama e! may be reco,ered. %here i! no ,alid ba!i! for the a#ard of e'emplary dama e! #hich i! !uppo!ed to !er,e a! a #arnin to other ban+! from di!!ipatin their a!!et! in anomalou! tran!action!. :t #a! not pro,en by pri,ate re!pondent!, and neither #a! there a cate orical findin made by the trial court, that the ban+ actually en a ed in anomalou! real e!tate tran!action!. %he !ame #ere rai!ed only durin the te!timony of the ban+ e'aminer of the &entral -an+, but no documentary e,idence #a! e,er pre!ented. 9ence, it #a! error for the lo#er court to impo!e e'emplary dama e! upon the ban+ !ince, in contract!, !uch !anction re*uire! that the offendin party acted in a #anton, fraudulent, rec+le!!, oppre!!i,e or male,olent manner. 0either doe! thi! ca!e pre!ent the !ituation #here attorneyJ! fee! may be a#arded. :n the ab!ence of fraud, bad faith, malice or #anton attitude, petitioner ban+ may, therefore, not be held re!pon!ible for dama e! #hich may be rea!onably attributed to the non(performance of the obli ation. &on!e*uently, #e reiterate that under the

premi!e! and pur!uant to the pro,i!ion! of la#, it i! apparent that pri,ate re!pondent! are not )u!tifiably entitled to the payment of moral and e'emplary dama e! and attorneyJ! fee!. 3hile #e tend to a ree #ith petitioner ban+ that pri,ate re!pondent!J claim! !hould ha,e been filed in the li*uidation proceedin ! in &i,il &a!e 0o. 8"==5, entitled 2:n $e1 >i*uidation of the Fidelity 6a,in ! and Mort a e -an+,2 pendin before -ranch N::: of the then &ourt of Fir!t :n!tance of Manila, #e do not belie,e that the deci!ion rendered in the in!tant ca!e #ould be ,iolati,e of the le al pro,i!ion! on preference and concurrence of credit!.
People vs1 =ick Dn!</A *%R+ 9A< -.99.0 Facts1 Accu!ed Cic+ On , one of the depo!itor! of the 9ome 6a,in ! -an+ and %ru!t &ompany A96-%&B opened a !a,in ! account #ith 96-%& #ith an initial depo!it of 822.1/ in ca!h and 81=, ===.== in chec+. On #a! allo#ed to #ithdra# from hi! !a,in ! account #ith the -an+ the !um of 85,===.==, #ithout hi! chec+ under oin the u!ual and re lementary clearance. %he #ithdra#al !lip #a! !i ned and appro,ed by >ino Morfe, then the -ranch Mana er, and accu!ed >ucila %alabi!, the -ranch &a!hier. 6ub!e*uently, On depo!ited ele,en chec+! in hi! !a,in ! account #ith the -an+ and a ain!t #hich he made #ithdra#al! a ain!t it! amount. A ain, the #ithdra#al of the amount by On #a! made before !aid chec+! #ere cleared and the -an+ had collected their amount! and #ith the appro,al of %alabi!. 9o#e,er, #hen the -an+ pre!ented the ele,en chec+! i!!ued, depo!ited and a ain!t #hich On made #ithdra#al! a ain!t it! amount!, to their re!pecti,e dra#ee ban+! for payment, they #ere all di!honored for lac+ or in!ufficiency of fund!. -ecau!e of thi!, the -an+ filed a criminal action for G!tafa a ain!t On , and the -an+4! officer in char e ;illaran and %alabi!. %alabi! te!tified that the appro,al of the #ithdra#al! of On a ain!t hi! uncleared chec+! #a! in accordance #ith the in!truction of their then ban+ mana er and that it i! a +ind of accommodation i,en to On and al!o a common practice of the -an+.$%& ruled On a! uilty for the crime of e!tafa but ac*uitted ;illarin and %alabi! a! their uilt #ere not pro,en beyond rea!onable doubt. &A affirmed $%&! deci!ion!. 2ssue: 1. 3hat i! the nature of ban+ depo!it!K 2. 3O0 On i! uilty of G!tafa. 0o. Rulin!: .1 %he 6upreme &ourt held that ban+ depo!it! are in the nature of irre ular depo!it!.-an+ depo!it! are really loan! becau!e they earn intere!t. 3hether fi'ed, !a,in !, or current, all ban+ Adepo!it!are to be treated a! loan! and are to be co,ered by the la# on loan!. <1 %he element! of thi! +ind of e!tafa are the follo#in 1 A1B po!tdatin or i!!uance of a chec+ in payment of an obli ation contracted at the time the chec+ #a! i!!ued5 A2B lac+ or in!ufficiency of fund! to co,er the chec+5 andA3B dama e to the payee thereof. :n thi! ca!e, the fact #a! e!tabli!hed that On either i!!ued or indor!ed the !ub)ect chec+!. 9o#e,er, it mu!t be remembered that the rea!on for the con,iction of an accu!ed of the crime of e!tafa i! hi! uilty +no#led e of the fact that he had no fund! in the ban+ #hen he ne otiated the !puriou! chec+. :n the pre!ent ca!e, ho#e,er, the pro!ecution failed to pro,e that On had +no#led e #ith re!pect to the chec+ !he indor!ed. Moreo,er, it ha! al!o been pro,en that it #a! the -an+ #hich ranted him a dra#n a ain!t uncollected depo!it ACAMCB pri,ile e #ithout need of any preten!ion! on hi! part. %he pri,ile e thi! pri,ile e #a! not only for the !ub)ect chec+!, but for other pa!t tran!action!. :f e,er, he indeed acted fraudulently, he could not ha,e done !o #ithout the acti,e cooperation of the -an+! employee!. 6ince %alabi! and ;illaran #ere declared innocent of the crime! char ed a ain!t them, the !ame !hould be !aid for the On . %hu!, On cannot be held criminally liable a ain!t the -an+. 9e can only be held ci,illy liable a! the -an+ incurred dama e! BP2 v1 %+, <@< *%R+ @/< -.99A0

=D%,R2>E: A ban+ i! under no duty or obli ation to ma+e the application. %o apply the depo!it to the payment of the loan i! a pri,ile e, a ri ht to !et( off #hich the ban+ ha! the option to e'erci!e. F+%,* -eni no >im had 2 account! at &-%& A-8:J! predece!!orB1 One )ointly #ith Ga!tern 8ly#ood &orporation, of #hich he #a! an officer, and another )oint chec+in account #ith Mariano ;ela!co. 6ub!e*uently, ;ela!co died in April 1977. :n Au u!t 1977, Ga!tply and >im obtained a loan from &-%& for 873,=== e,idenced by a promi!!ory note and !ecured by a 9oldout A reement i,in &-%& the po#er to ta+e fund! from the )oint account #ith ;ela!co Aappro' 8331,===B and apply the !ame a! payment for the loan. :n the meantime, a ca!e for the !ettlement of ;ela!coJ! e!tate #a! filed #herein the #hole balance in the )oint account of ;ela!co and >im #a! claimed a! part of ;ela!coJ! e!tate. %he inte!tate court ranted the ur ent motion of the heir! of ;ela!co to #ithdra# the depo!it under the )oint account. :n 198=, &-%& mer ed #ith -8:. :n 1987, -8: filed a complaint a ain!t >im and Ga!tern demandin payment of the promi!!ory note for 873,===.==. >im and Ga!tern, in turn, filed a counterclaim a ain!t -8: for the return of the balance in the di!puted account !ub)ect of the 9oldout A reement. %he &ourt of Appeal! rendered a deci!ion !tatin 1 1B On the claim1 :t #a! the duty of -8: to debit the account of the defendant! under the promi!!ory note to !et off the loan e,en thou h the !ame ha! no fi'ed maturity. 2B On the counterclaim1 %he !ettlement of ;ela!coJ! e!tate had nothin to do #ith the claim of the defendant! for the return of the balance of their account #ith -8: a! they #ere not pri,y to that ca!e, and that the defendant!, a! depo!itor! of &-%&F-8:, are the latterJ! creditor!5 hence, -8: !hould ha,e protected the defendant!J intere!t in the ca!e #hen the !aid account #a! claimed by ;ela!coJ! e!tate. :t then ordered -8: to pay defendant! the amount of repre!entin the out!tandin balance in the ban+ account of defendant!. 2**BE* 1B 3hether -8: #a! duty(bound to debit the account of the defendant! to !et off the loan becau!e of the 9oldout A reement, and 2B 3hether the counterclaim for the amount in the )oint account can be a#arded de!pite the !ame bein i,en to the heir! of ;ela!co already. RBL2>& .0 >D1 :t i! clear from the 9oldout A reement that -8: had e,ery ri ht to demand that Ga!tern and >im !ettle their liability under the promi!!ory note. :t cannot be compelled to retain and apply the depo!it in >im and ;ela!coJ! )oint account to the payment of the note. 3hat the a reement conferred on &-%& #a! a po#er, not a duty. <enerally, a ban+ i! under no duty or obli ation to ma+e the application. %o apply the depo!it to the payment of a loan i! a pri,ile e, a ri ht of !et(off #hich the ban+ ha! the option to e'erci!e. 2B CE*1 :n 6errano ,!. &entral -an+ of the 8hilippine! it #a! held that ban+ depo!it! are in the nature of irre ular depo!it!5 they are really loan! becau!e they earn intere!t. %he relation!hip then bet#een a depo!itor and moreo,er, the order of the court in the inte!tate ca!e merely authoriHed the heir! of ;ela!co to #ithdra# the account. -8: #a! not !pecifically ordered to relea!e the account to the !aid heir!5 hence, it #a! under no )udicial compul!ion to do !o. %he authoriHation i,en to the heir! of ;ela!co cannot be con!trued a! a final determination or ad)udication that the account belon ed to ;ela!co. 3e ha,e ruled that #hen the o#ner!hip of a particular property i! di!puted, the determination by a probate court of #hether that property i! included in the e!tate of a decea!ed i! merely pro,i!ional in character and cannot be the !ub)ect of e'ecution. -ecau!e the o#ner!hip of the depo!it remained undetermined, -8:, a! the debtor #ith re!pect thereto, had no ri ht to pay to per!on! other than tho!e in #ho!e fa,or the obli ation #a! con!tituted or #ho!e ri ht or authority to recei,e payment i! indi!putable. %he payment of the money depo!ited #ith -8: that #ill e'tin ui!h it! obli ation to the creditor(depo!itor i! payment to the per!on of the creditor or to one authoriHed by him or by the la# to recei,e it. 8ayment made by the debtor to the #ron party doe! not e'tin ui!h the obli ation a! to the creditor #ho i!

#ithout fault ne li ence, e,en if the debtor acted in utmo!t ood faith and by mi!ta+e a! to the per!on of the creditor, or throu h error induced by fraud of a third per!on. %he payment then by -8: to the heir! of ;ela!co, e,en if done in ood faith, did not e'tin ui!h it! obli ation to the true depo!itor, Ga!tern.

,+> ,2D>& ,2%E, claimant8appellant, vs1 + ER2%+> +PD,3E%+R2E* %D1, E, +L1, claimants8appellees1 =D%,R2>E*: 1.%he ban+ can ma+e u!e a! it! o#n the money depo!ited. 2.&urrent account and !a,in ! depo!it! are not preferred credit! in ca!e of in!ol,ency and li*uidation. 3.%he ban+ can off!et the depo!it of the client #ho ha! a debt #ith the ban+. /.Cepo!it! !hould not earn intere!t from the time the ban+ cea!e to do bu!ine!!. :M8G$:A>, ..1 Facts: :n the proceedin ! for the li*uidation of the Mercantile -an+ of &hina, the appellant pre!ented a #ritten claim alle in 1 that #hen thi! ban+ cea!ed to operate on 6eptember 19, 1931, hi! current account in !aid ban+ !ho#ed a balance of 89,"57.5= in hi! fa,or5 that on the !ame date hi! !a,in ! account in the !aid ban+ al!o !ho#ed a balance in hi! fa,or of 82=,=== plu! intere!t then due amountin to 819/.785 that on the other hand, he o#ed the ban+ in the amount of 813,2"2.58, the amount of the tru!t receipt! #hich he !i ned becau!e of hi! #ithdra#al from the ban+ of certain merchandi!e con!i ned to him #ithout payin the draft! dra#n upon him by the remittor! thereof5 that the credit! thu! de!cribed !hould be !et off a ain!t each other accordin to la#, and on !uch !et off bein made it appeared that he #a! !till the creditor of the ban+ in the !um of 81",589.7=. And he a!+ed that the court order the -an+ &ommi!!ioner to pay him the afore!aid balance and that the !ame be declared a! preferred credit. %he claim #a! referred to the commi!!ioner appointed by the court, #ho at the !ame time acted a! referee, and thi! officer recommended that the balance claimed be paid #ithout intere!t and a! an ordinary credit. %he court appro,ed the recommendation and entered )ud ment in the accordance there#ith. %he claimant too+ an appeal 2**BE*: 1.3hether or not the current account and !a,in ! depo!it! are preferred credit! in ca!e! in,ol,in in!ol,ency and li*uidation of the ban+. 2.3hether or not the depo!it! could be off!et #ith the debt of the depo!itor #ith the ban+. 3.3hether or not the depo!it! !hould earn intere!t from the time the ban+ cea!ed to operate. RBL2>&:

1.%he 6& ruled that, the!e depo!it! are e!!entially merchantile contract! and !hould, therefore, be o,erned by the pro,i!ion! of the &ode of &ommerce. :n accordance #ith article 3=9, the !o( called current account and !a,in ! depo!it! ha,e lo!t the character of depo!it! properly !o( called, and are con,erted into !imple commercial loan!, becau!e the ban+ di!po!ed of the fund! depo!ited by the claimant for it! ordinary tran!action! and for the ban+in bu!ine!! in #hich it #a! en a ed. %hat the ban+ had the authority of the claimant to ma+e u!e of the money depo!ited on current and !a,in ! account i! deducible from the fact that the ban+ ha! been payin intere!t on both depo!it!, and the claimant him!elf a!+! that he be allo#ed intere!t up to the time #hen the ban+ cea!ed it! operation!. Moreo,er, accordin to !ection 125 of the &orporation >a# and 9 of Act 0o. 315/, !aid ban+ i! authoriHed to ma+e u!e of the current account, !a,in !, and fi'ed depo!it! pro,ided it retain! in it! trea!ury a certain percenta e of the amount! of !aid depo!it!. 2. :t appear! that e,en after the enactment of the :n!ol,ency >a# there #a! no la# in thi! )uri!diction o,ernin the order or preference of credit! in ca!e of in!ol,ency and li*uidation of a ban+. -ut the 8hilippine >e i!lature !ub!e*uently enacted Act 0o. 3519, amended ,ariou! !ection! of the $e,i!ed Admini!trati,e &ode, #hich too+ effect on February 2=, 1929, and !ection 1"/1 of thi! latter &ode. a! amended by !aid Act pro,ide!1 6G&. 1"/1. Ci!tribution of a!!et!. O :n the ca!e of the li*uidation of a ban+ or ban+in in!titution, after payment of the co!t! of the proceedin , includin rea!onable e'pen!e!, commi!!ion! and fee! of the -an+ &ommi!!ioner, to be allo#ed by the court, the -an+ &ommi!!ioner !hall pay the debt! of the in!titution, under of the court in the order of their le al priority. From thi! !ection 1"/1 #e deduce that the intention of the 8hilippine >e i!lature, in pro,idin that the -an+ &ommi!!ioner !hall pay the debt! of the company by ,irtue of an order of the court in the order of their priority, #a! to enforce the pro,i!ion! of !ection /8, /9 and 5= of the :n!ol,ency >a# in the !en!e that they are made applicable to ca!e! of in!ol,ency or ban+ruptcy and li*uidation of ban+!. 0o other deduction can be made from the phra!e Din the order of their le al priorityE employed by the la#, for there bein no la# e!tabli!hin any priority in the order of payment of credit!, the le i!lature could not rea!onably refer to any le i!lation upon the !ub)ect, unle!! the interpretation abo,e !tated i! accepted. G'aminin no# the claim! of the appellant, it appear! that none of them fall! under any of the ca!e! !pecified by !ection /8, /9 and 5= of the :n!ol,ency >a#5 #herefore, #e conclude that the appellant4! claim!, con!i!tin of hi! current and !a,in ! account, are not preferred credit!. 3. D:t may be !tated a! a eneral rule that #hen a depo!itor i! indebted to a ban+, and the debt! are mutual O that i!, bet#een the !ame partie! and in the !ame ri ht O the ban+ may apply the depo!it, or !uch portion thereof a! may be nece!!ary, to the payment of the debt due it by the depo!itor, pro,ided there i! no e'pre!! a reement to the contrary and the depo!it i! not !pecially applicable to !ome other particular purpo!e!.E A7 Am. .ur., par. "29, p./555 Mnited 6tate! ,!. -utter#orth(.ud!on &orp., 2"7 M.6., 3875 0ational -an+ ,!. Mor an, 2=7 Ala.., "55 -an+ of <unter!,ille ,!. &rayter, 199 Ala., "995 %atum ,!. &ommercial -an+ 7 %. &o., 193 Ala., 12=5 Ce!ha -an+ 7 %. &o. ,!. Puillin , 118 Ar+., 11/5 9ollo#ay ,!. Fir!t 0at. -an+, /5 :daho, 7/"5 3yman ,!. Ft. Cearborn 0at -an+, 181 :ll., 2795 0iblac+ ,!. 8ar+ 0at. -an+, 1"9 :ll., 5175 Fir!t 0at -an+ ,!. 6tapf., 1"5 :nd., 1"25 -edford -an+ ,!. Acoam, 125 :nd., 58/.B %he !ituation referred to by the appellee! i! ine,itable becau!e !ection 1"39 of the $e,i!ed Admini!trati,e &ode, a! amended by Act 0o. 3519, pro,ide! that the -an+ &ommi!!ioner !hall reduce the a!!et! of the ban+ into ca!h and thi! cannot be done #ithout fir!t li*uidatin indi,idually the

account! of the debtor! of !aid ban+, and in ma+in thi! indi,idual li*uidation the debtor! are entitled to !et off, by #ay of compen!ation, their claim! a ain!t the ban+. /. Mpon thi! point a di!tinction mu!t be made bet#een the intere!t #hich the depo!it! !hould earn from their e'i!tence until the ban+ cea!ed to operate, and that #hich they may earn from the time the ban+4! operation! #ere !topped until the date of payment of the depo!it!. A! to the fir!t cla!!, it !hould be paid becau!e !uch intere!t ha! been earned in the ordinary cour!e of the ban+4! bu!ine!! and before the latter ha! been declared in a !tate or li*uidation. Moreo,er, the ban+ bein authoriHed by la# to ma+e u! of the depo!it!, #ith the limitation !tated, to in,e!t the !ame in it! bu!ine!! and other operation!, it may be pre!umed that it bound it!elf to pay intere!t to the depo!itor! a! in fact it paid intere!t prior to the date of the !aid claim!. A! to the intere!t #hich may be char ed from the date the ban+ cea!ed to do bu!ine!! becau!e it #a! declared in a !tate of li*uidation, 6& held that the !aid intere!t !hould not be paid. Mnder article! 11=1 and 11=8 of the &i,il &ode, intere!t i! allo#ed by #ay of indemnity for dama e! !uffered, in the ca!e! #herein the obli ation con!i!t! in the payment of money. :n ,ie# of thi!, 6& held that in the ab!ence of any e'pre!! la# or any applicable pro,i!ion of the &ode of &ommerce, it i! not proper to pay thi! la!t +ind of intere!t to the appellant upon hi! depo!it! in the ban+, for thi! #ould be anomalou! and un)u!tified in a li*uidation or in!ol,ency of a ban+. %hi! rule !hould be !trictly ob!er,ed in the in!tant ca!e becau!e it i! under!tood that the a!!et! !hould be prorated amon all the creditor! a! they are in!ufficient to pay all the obli ation! of the ban+. :n ,ie# of all the fore oin con!ideration!, 6& affirmed the part of the appealed deci!ion for the rea!on! !tated herein, and it i! ordered that the net claim of the appellant, amountin to 813,"11.21, i! an ordinary and not a preferred credit, and that he i! entitled to char e intere!t on !aid amount up to 6eptember 19, 1931.
&B2>&D>+, JR1 v1 %2,C F2*%+L DF +>2L+, .<: *%R+ ;?? -.9:A0 =D%,R2>E: %he relation!hip bet#een the depo!itor and the ban+ i! that of creditor and debtor. &on!e*uently, the o#ner!hip of the amount depo!ited #a! tran!mitted to the -an+ upon the perfection of the contract and it can ma+e u!e of the amount depo!ited for it! ban+in operation!, !uch a! to pay intere!t! on depo!it! and to pay #ithdra#al!. F+%,* From March 2=,1979 to March, 1981, Ca,id in,e!ted #ith the 0ation 6a,in ! and >oan A!!ociation, Ahereinafter called 06>AB the !um of 81,1/5,5/".2= on nine depo!it!, 813,531.9/ on !a,in ! account depo!it! A)ointly #ith hi! !i!ter, Ceni!e IuhneB, M6Q1=,===.== on time depo!it, M6Q15,===.== under a receipt and uarantee of payment and M6Q5=,===.== under a receipt dated .une 8, 198= Aau )ointly #ith Ceni!e IuhneB, that Ca,id #a! induced into ma+in the afore!tated in,e!tment! by $obert Mar!hall an Au!tralian national #ho #a! alle edly a clo!e a!!ociate of petitioner <uin ona .r., then 06>A 8re!ident, petitioner Martin, then 06>A G'ecuti,e ;ice(8re!ident of 06>A and petitioner 6anto!, then 06>A <eneral Mana er5 that on March 21,1981 0 >A #a! placed under recei,er!hip by the &entral -an+, !o that Ca,id filed claim! there#ith for hi! in,e!tment! and tho!e of hi! !i!ter5 that on .uly 22, 1981 Ca,id recei,ed a report from the &entral -an+ that only 83=5,821.92 of tho!e in,e!tment! #ere entered in the record! of 06>A5 that, therefore, the re!pondent! in :.6. 0o. 81( 31938 mi!appropriated the balance of the in,e!tment!, at the !ame time ,iolatin &entral -an+ &ircular 0o. 3"/ and related &entral -an+ re ulation! on forei n e'chan e tran!action!5 that after demand!, petitioner <uin ona .r. paid only 82==,===.==, thereby reducin the amount! mi!appropriated to 8959, =78.1/ and M6Q75,===.==. <uin ona, Martin and 6anto! #ere char ed #ith e!tafa before the &ity Fi!cal of Manila. %he herein petitioner! A<uin ona et alB contend that the Fi!cal ha! no authority to conduct a

preliminary in,e!ti ation and to pro!ecute them becau!e the act! alle ed by Ca,id #a! only ci,il in nature and not criminal. 2**BE 3hether the char e! a ain!t <uin ona Ae!tafa and ,iolation of &- &ircular 0o. 3"/ and related re ulation! re ardin forei n e'chan e tran!action!B i! #ithin the )uri!diction of the &ity Fi!calK RBL2>& Fi!cal ha! no )uri!diction o,er the !ub)ect matter. :t mu!t be pointed out that #hen pri,ate re!pondent Ca,id in,e!ted hi! money on nine. and !a,in ! depo!it! #ith the afore!aid ban+, the contract that #a! perfected #a! a contract of !imple loan or mutuum and not a contract of depo!it. %hu!, Article 198= of the 0e# &i,il &ode pro,ide! that1 Article 198=. Fi'ed, !a,in !, and current depo!it! of(money in ban+! and !imilar in!titution! !hall be o,erned by the pro,i!ion! concernin !imple loan. 9ence, the relation!hip bet#een the pri,ate re!pondent and the 0ation 6a,in ! and >oan A!!ociation i! that of creditor and debtor5 con!e*uently, the o#ner!hip of the amount depo!ited #a! tran!mitted to the -an+ upon the perfection of the contract and it can ma+e u!e of the amount depo!ited for it! ban+in operation!, !uch a! to pay intere!t! on depo!it! and to pay #ithdra#al!. 3hile the -an+ ha! the obli ation to return the amount depo!ited, it ha!, ho#e,er, no obli ation to return or deli,er the !ame money that #a! depo!ited. And, the failure of the -an+ to return the amount depo!ited #ill not con!titute e!tafa throu h mi!appropriation puni!hable under Article 315, par. lAbB of the $e,i!ed 8enal &ode, but it #ill only i,e ri!e to ci,il liability o,er #hich the public re!pondent! ha,e no( )uri!diction. *ERR+>D v1 %E>,R+L B+>E, 9F *%R+ 9F -.9:/0 =D%,R2>E: -an+ depo!it! are in the nature of irre ular depo!it!. %hey are really loan! becau!e they earn intere!t. All +ind! of ban+ depo!it!, #hether fi'ed, !a,in !, or current are to be treated a! loan! and are to be co,ered by the la# on loan!. &urrent and !a,in ! depo!it! are loan! to a ban+ becau!e it can u!e the !ame. F+%,* Manuel 6errano made a time depo!it A%CB for 1 year #ith "R intere!t of 815=,=== #ith the O,er!ea! -an+ of Manila, #hile &oncepcion Mane)a made a !imilar depo!it for 1 year #ith ".5R intere!t of 82==,=== #ith the !ame ban+. 3hen &oncepcion Mane)a married Feli'berto 6errano Apre!umably the brother of Manuel 6erranoB, !he a!!i ned and con,eyed to Manuel her %C of 82==, ===. 3hen 6errano pre!ented the %C certificate! for enca!hment to O,er!ea! -an+ of Manila, none #a! honored by !aid ban+. 6errano alle ed that the &entral -an+ failed to !trictly !uper,i!e the act! of O,er!ea! -an+ of Manila and protect the intere!t! of it! depo!itor! by ,irtue of the con!tructi,e tru!t created #hen &entral -an+ re*uired the ban+ to increa!e it! collateral! for it! o,erdraft! and emer ency loan!, !aid collateral! alle edly ac*uired throu h the u!e of depo!itor! money. 9ence, 6errano prayed for &entral -an+4! !olidary liability #ith O,er!ea! -an+ of Manila to him for the 835=,=== %C! made, amon other!. 2**BE 3hether &entral -an+ !hould be held !olidarily liable RBL2>& >D1 6errano4! claim! of mandamu! and prohibition are not proper a! there i! no !ho#n clear abu!e of di!cretion by the &entral -an+ in it! e'erci!e of !uper,i!ion o,er the ban+. :f there #a!, the proper party to in,o+e in thi! ca!e #a! O,er!ea! -an+ of Manila, not the &entral -an+. Furthermore, both partie! o,erloo+ed one fundamental principle in the nature of ban+ depo!it! #hen 6errano claimed that there !hould be created a con!tructi,e tru!t in hi! fa,or #hen O,er!ea! -an+ of Manila increa!ed it! collateral! in fa,or of &entral -an+ for it! o,erdraft! and emer ency loan!, !ince the!e collateral! #ere ac*uired by the u!e of depo!itor!4 money. -an+ depo!it! are in the nature of irre ular depo!it!. %hey are really loan! becau!e they earn intere!t. All +ind! of ban+ depo!it!, #hether fi'ed, !a,in !, or current are to be treated a! loan! and are to be co,ered by the la# on loan!. &urrent and !a,in ! depo!it! are loan! to a ban+ becau!e it can u!e the !ame. 6errano,

in ma+in %C! that earn intere!t! #ith the ban+, #a! in reality it! creditor. Failure of the ban+ to honor the %C i! failure to pay it! obli ation a! debtor and not a breach of tru!t ari!in from a depo!itary4! failure to return the !ub)ect matter of the depo!it.