Tan, Tiong, Tick v. American Hypothecary (case digest) time the bank ceased to operate.
to operate. Examining now the claims of the appellant, it appears that
In Re Liquidation of Mercantile Bank of China.
TAN TIONG TICK, claimant-appellant, vs. AMERICAN
APOTHECARIES CO., ET AL., claimants-appellees.
G.R. No. L-43682 March 31, 1938
DOCTRINES:
1.The bank can make use as its own the money deposited.
2.Current account and savings deposts are not preferred
credits in case of insolvency and liquidation.
3.The bank can offset the deposit of the client who has a debt
with the bank.
4.Deposits should not earn interest from the time the bank
cease to do business. IMPERIAL, J.:
Facts:
In the proceedings for the liquidation of the Mercantile Bank of
China, the appellant presented a written claim alleging: that
when this bank ceased to operate on September 19, 1931, his
current account in said bank showed a balance of P9,657.50
in his favor; that on the same date his savings account in the
said bank also showed a balance in his favor of P20,000 plus
interest then due amounting to P194.78; that on the other
hand, he owed the bank in the amount of P13,262.58, the
amount of the trust receipts which he signed because of his
withdrawal from the bank of certain merchandise consigned to
him without paying the drafts drawn upon him by the
remittors thereof; that the credits thus described should be set
off against each other according to law, and on such set off
being made it appeared that he was still the creditor of the
bank in the sum of P16,589.70. And he asked that the court
order the Bank Commissioner to pay him the aforesaid balance
and that the same be declared as preferred credit. The claim
was referred to the commissioner appointed by the court, who
at the same time acted as referee, and this officer
recommended that the balance claimed be paid without
interest and as an ordinary credit. The court approved the
recommendation and entered judgment in the accordance
therewith. The claimant took an appeal.
ISSUES:
1.Whether or not the current account and savings deposits are
preferred credits in cases involving insolvency and liquidation
of the bank.
2.Whether or not the deposits could be offset with the debt of
the depositor with the bank.
3.Whether or not the deposits should earn interest from the
none of them falls under any of the cases specified by section
RULING: 48, 49 and 50 of the Insolvency Law; wherefore, we conclude
that the appellants claims, consisting of his current and
1.The SC ruled that, these deposits are essentially merchantile savings account, are not preferred credits.
contracts and should, therefore, be governed by the provisions
of the Code of Commerce. In accordance with article 309, the 3. It may be stated as a general rule that when a depositor is
so-called current account and savings deposits have lost the indebted to a bank, and the debts are mutual that is,
character of deposits properly so-called, and are converted into between the same parties and in the same right the bank
simple commercial loans, because the bank disposed of the may apply the deposit, or such portion thereof as may be
funds deposited by the claimant for its ordinary transactions necessary, to the payment of the debt due it by the depositor,
and for the banking business in which it was engaged. That provided there is no express agreement to the contrary and the
the bank had the authority of the claimant to make use of the deposit is not specially applicable to some other particular
money deposited on current and savings account is deducible purposes. (7 Am. Jur., par. 629, p.455; United States vs.
from the fact that the bank has been paying interest on both Butterworth-Judson Corp., 267 U.S., 387; National Bank vs.
deposits, and the claimant himself asks that he be allowed Morgan, 207 Ala.., 65; Bank of Guntersville vs. Crayter, 199
interest up to the time when the bank ceased its operations. Ala., 699; Tatum vs. Commercial Bank & T. Co., 193 Ala., 120;
Moreover, according to section 125 of the Corporation Law and Desha Bank & T. Co. vs. Quilling, 118 Ark., 114; Holloway vs.
9 of Act No. 3154, said bank is authorized to make use of the First Nat. Bank, 45 Idaho, 746; Wyman vs. Ft. Dearborn Nat
current account, savings, and fixed deposits provided it retains Bank, 181 Ill., 279; Niblack vs. Park Nat. Bank, 169 Ill., 517;
in its treasury a certain percentage of the amounts of said First Nat Bank vs. Stapf., 165 Ind., 162; Bedford Bank vs.
deposits. Acoam, 125 Ind., 584.) The situation referred to by the
appellees is inevitable because section 1639 of the Revised
2.It appears that even after the enactment of the Insolvency Administrative Code, as amended by Act No. 3519, provides
Law there was no law in this jurisdiction governing the order that the Bank Commissioner shall reduce the assets of the
or preference of credits in case of insolvency and liquidation of bank into cash and this cannot be done without first
a bank. But the Philippine Legislature subsequently enacted liquidating individually the accounts of the debtors of said
Act No. 3519, amended various sections of the Revised bank, and in making this individual liquidation the debtors are
Administrative Code, which took effect on February 20, 1929, entitled to set off, by way of compensation, their claims against
and section 1641 of this latter Code. as amended by said Act the bank.
provides:
4. Upon this point a distinction must be made between the
SEC. 1641. Distribution of assets. In the case of the interest which the deposits should earn from their existence
liquidation of a bank or banking institution, after payment of until the bank ceased to operate, and that which they may
the costs of the proceeding, including reasonable expenses, earn from the time the banks operations were stopped until
commissions and fees of the Bank Commissioner, to be allowed the date of payment of the deposits. As to the first class, it
by the court, the Bank Commissioner shall pay the debts of should be paid because such interest has been earned in the
the institution, under of the court in the order of their legal ordinary course of the banks business and before the latter
priority. has been declared in a state or liquidation. Moreover, the bank
being authorized by law to make us of the deposits, with the
From this section 1641 we deduce that the intention of the limitation stated, to invest the same in its business and other
Philippine Legislature, in providing that the Bank operations, it may be presumed that it bound itself to pay
Commissioner shall pay the debts of the company by virtue of interest to the depositors as in fact it paid interest prior to the
an order of the court in the order of their priority, was to date of the said claims.
enforce the provisions of section 48, 49 and 50 of the
Insolvency Law in the sense that they are made applicable to As to the interest which may be charged from the date the
cases of insolvency or bankruptcy and liquidation of banks. No bank ceased to do business because it was declared in a state
other deduction can be made from the phrase in the order of of liquidation, SC held that the said interest should not be
their legal priority employed by the law, for there being no law paid. Under articles 1101 and 1108 of the Civil Code, interest
establishing any priority in the order of payment of credits, the is allowed by way of indemnity for damages suffered, in the
legislature could not reasonably refer to any legislation upon cases wherein the obligation consists in the payment of money.
the subject, unless the interpretation above stated is accepted. In view of this, SC held that in the absence of any express law
or any applicable provision of the Code of Commerce, it is not Art. 1962. A deposit is constituted from the moment a person Bank deposits are really loans because they earn
proper to pay this last kind of interest to the appellant upon receives a thing belonging to another, with the obligation of interest. Whether fixed, savings, or current, all bank
his deposits in the bank, for this would be anomalous and safely keeping it and of returning the same. If the safekeeping Adeposits are to be treated as loans and are to be
unjustified in a liquidation or insolvency of a bank. This rule of the thing delivered is not the principal purpose of the covered by the law on loans.
should be strictly observed in the instant case because it is contract, there is no deposit but some other contract.
understood that the assets should be prorated among all the People vs. Dick Ong 204 SCRA 942 (1991) 2. The elements of this kind of estafa are the following:
creditors as they are insufficient to pay all the obligations of (1) postdating or issuance of a check in payment of an
the bank. Facts: obligation contracted at the time the check was
issued; (2) lack or insufficiency of funds to cover the
In view of all the foregoing considerations, SC affirmed the part Accused Dick Ong, one of the depositors of the Home Savings check; and (3) damage to the payee thereof.
of the appealed decision for the reasons stated herein, and it is Bank and Trust Company (HSBTC) opened a savings account
ordered that the net claim of the appellant, amounting to with HSBTC with an initial deposit of P22.14 in cash and In this case, the fact was established that Ong either
P13,611.21, is an ordinary and not a preferred credit, and that P10,000.00 in check. issued or indorsed the subject checks. However, it
he is entitled to charge interest on said amount up to must be remembered that the reason for the
September 19, 1931. Ong was allowed to withdraw from his savings account with conviction of an accused of the crime of estafa is his
the Bank the sum of P5,000.00, without his check undergoing guilty knowledge of the fact that he had no funds in
BPI vs. Intermediate Appellate Court GR# L-66826, August 19, the usual and reglementary clearance. The withdrawal slip was the bank when he negotiated the spurious check.
1988 signed and approved by Lino Morfe, then the Branch Manager, In the present case, however, the prosecution failed to
CORTES, J: and accused Lucila Talabis, the Branch Cashier. prove that Ong had knowledge with respect to the
checks he indorsed.
Facts: Subsequently, Ong deposited eleven checks in his savings Moreover, it has also been proven that it was the
account with the Bank and against which he made Bank which granted him a drawn against uncollected
Rizaldy T. Zshornack and his wife maintained in COMTRUST a withdrawals against its amount. Again, the withdrawal of the deposit (DAUD) privilege without need of any
dollar savings account and a peso current account. An amount by Ong was made before said checks were cleared and pretensions on his part. The privilege this privilege
application for a dollar drat was accomplished by Virgillo the Bank had collected their amounts and with the approval of was not only for the subject checks, but for other past
Garcia branch manager of COMTRUST payable to a certain Talabis. transactions. If ever, he, indeed acted fr
Leovigilda Dizon. In the PPLICtion, Garcia indicated that the audulently, he could not have done so without the
amount was to be charged to the dolar savings account of the However, when the Bank presented the eleven checks issued, active cooperation of the Banks employees. Since
Zshornacks. There wasa no indication of the name of the deposited and against which Ong made withdrawals against its Talabis and Villaran were declared innocent of the
purchaser of the dollar draft. Comtrust issued a check payable amounts, to their respective drawee banks for payment, they crimes charged against them, the same should be
to the order of Dizon. When Zshornack noticed the withdrawal were all dishonored for lack or insufficiency of funds. Because said for the Ong.
from his account, he demanded an explainaiton from the bank. of this, the Bank filed a criminal action for Estafa against Ong,
In its answer, Comtrust claimed that the peso value of the and the Banks officer in charge Villaran and Talabis. Thus, Ong cannot be held criminally liable against
withdrawal was given to Atty. Ernesto Zshornack, brother of the Bank. He can only be held civilly liable as the
Rizaldy. When he encashed with COMTRUST a cashiers check Talabis testified that the approval of the withdrawals of Ong Bank incurred damages.
for P8450 issued by the manila banking corporation payable to against his uncleared checks was in accordance with the Teofisto Guingona, Jr., Antonio Martin, and Teresita Santos vs.
Ernesto. instruction of their then bank manager and that it is a kind of The City Fiscal of Manila, Hon. Jose Flaminiano, Asst. City
accommodation given to Ong and also a common practice of Fiscal Felizardo Lota and
Issue: Whether the contract between petitioner and respondent the Bank.
bank is a deposit? Facts:
RTC ruled Ong as guilty for the crime of estafa but acquitted
Held: The document which embodies the contract states that Villarin and Talabis as their guilt were not proven beyond
From March 1979 to March 1981, Clement David made several
the US$3,000.00 was received by the bank for safekeeping. The reasonable doubt. CA affirmed RTCs decisions.
investments with the National Savings and Loan Association.
subsequent acts of the parties also show that the intent of the
Issue: On March 21, 1981, the bank was placed under receivership
parties was really for the bank to safely keep the dollars and to
1. What is the nature of bank deposits? by the Bangko Sentral. Upon Davids request, petitioners
return it to Zshornack at a later time. Thus, Zshornack
2. WON Ong is guilty of Estafa. No. Guingona and Martin issued a joint promissory note,
demanded the return of the money on May 10, 1976, or over
absorbing the obligations of the bank. On July 17, 1981, they
five months later.
Ruling: divided the indebtedness. David filed a complaint for estafa and
violation of Central Bank Circular No. 364 and related
The above arrangement is that contract defined under Article
1. The Supreme Court held that bank deposits are in regulations regarding foreign exchange transactions before the
1962, New Civil Code, which reads:
the nature of irregular deposits. Office of the City Fiscal of Manila. Petitioners filed the herein
petition for prohibition and injunction with a prayer for
immediate issuance of restraining order and/or writ of amount deposited will not constitute estafa through would be avoided but there will still be a civil liability on the
preliminary injunction to enjoin the public respondents to misappropriation punishable under Article 315, par. l(b) of the part of petitioners Guingona and Martin to pay the assumed
proceed with the preliminary investigation on the ground that Revised Penal Code, but it will only give rise to civil liability obligation.
the petitioners obligation is civil in nature. over which the public respondents have no jurisdiction.
(2) Petitioner Guingona merely accommodated the request of
Issue: But even granting that the failure of the bank to pay the time the Nation Savings and loan Association in order to clear the
and savings deposits of private respondent David would bank draft through his dollar account because the bank did
(1) Whether the contract between NSLA and David is a contract constitute a violation of paragraph 1(b) of Article 315 of the not have a dollar account. Immediately after the bank draft
of depositor a contract of loan, which answer determines Revised Penal Code, nevertheless any incipient criminal was cleared, petitioner Guingona authorized Nation Savings
whether the City Fiscal has the jurisdiction to file a case for liability was deemed avoided, because when the aforesaid bank and Loan Association to withdraw the same in order to be
estafa was placed under receivership by the Central Bank, petitioners utilized by the bank for its operations. It is safe to assume that
Guingona and Martin assumed the obligation of the bank to the U.S. dollars were converted first into Philippine pesos
private respondent David, thereby resulting in the novation of before they were accepted and deposited in Nation Savings and
(2) Whether there was a violation of Central Bank Circular No.
the original contractual obligation arising from deposit into a Loan Association, because the bank is presumed to have
364
contract of loan and converting the original trust relation followed the ordinary course of the business which is to accept
between the bank and private respondent David into an deposits in Philippine currency only, and that the transaction
Held: ordinary debtor-creditor relation between the petitioners and was regular and fair, in the absence of a clear and convincing
private respondent. Consequently, the failure of the bank or evidence to the contrary.
(1) When private respondent David invested his money on nine. petitioners Guingona and Martin to pay the deposits of private
and savings deposits with the aforesaid bank, the contract that respondent would not constitute a breach of trust but would In conclusion, considering that the liability of the petitioners is
was perfected was a contract of simple loan or mutuum and not merely be a failure to pay the obligation as a debtor. Moreover, purely civil in nature and that there is no clear showing that
a contract of deposit. Hence, the relationship between the while it is true that novation does not extinguish criminal they engaged in foreign exchange transactions, We hold that
private respondent and the Nation Savings and Loan liability, it may however, prevent the rise of criminal liability as the public respondents acted without jurisdiction when they
Association is that of creditor and debtor; consequently, the long as it occurs prior to the filing of the criminal information investigated the charges against the petitioners. Consequently,
ownership of the amount deposited was transmitted to the in court. In the case at bar, there is no dispute that petitioners public respondents should be restrained from further
Bank upon the perfection of the contract and it can make use Guingona and Martin executed a promissory note on June 17, proceeding with the criminal case for to allow the case to
of the amount deposited for its banking operations, such as to 1981 assuming the obligation of the bank to private continue, even if the petitioners could have appealed to the
pay interests on deposits and to pay withdrawals. While the respondent David; while the criminal complaint for estafa was Ministry of Justice, would work great injustice to petitioners
Bank has the obligation to return theamount deposited, it has, filed on December 23, 1981 with the Office of the City Fiscal. and would render meaningless the proper administration of
however, no obligation to return or deliver the same money that Hence, it is clear that novation occurred long before the filing justice.
was deposited. And, the failure of the Bank to return the of the criminal complaint with the Office of the City Fiscal.
Consequently, as aforestated, any incipient criminal liability