Serrano v. Central Bank of the Philippines
REITERATIONFacts
The Antecedents: Petitioner Manuel M. Serrano made time deposits with Overseas Bank of Manila (OBM) on October 13, 1966, and December 12, 1966, totaling P150,000.00. Concepcion Maneja also made a time deposit of P200,000.00 with OBM on March 6, 1967. On August 31, 1968, Maneja assigned her time deposit to Serrano. Despite demands from December 6, 1967, to March 4, 1968, OBM failed to honor the time deposit certificates. Procedural History: Petitioner filed a petition for mandamus and prohibition, seeking to establish joint and solidary liability against the Central Bank of the Philippines (CBP) and OBM, and its stockholders, for the total amount of P350,000.00 plus interest. Petitioner alleged that CBP failed in its duty to exercise strict supervision over OBM to protect depositors. Petitioner also prayed for the creation of a trust fund from OBM's properties for the benefit of depositors. An ex-parte preliminary injunction was denied. Petitioner's motion to intervene in G.R. No. L-29352 (Emerita M. Ramos, et al. vs. Central Bank of the Philippines), which involved OBM seeking to prevent its closure, was also denied. The Court had previously ruled in G.R. No. L-29352, annulling CBP's resolution to close and liquidate OBM. The Petition: Petitioner sought a decision on the merits, adjudging CBP jointly and severally liable with OBM for the P350,000.00 time deposits and interests, and declaring all assets assigned or mortgaged by OBM and the Ramos groups in favor of CBP as trust funds for the benefit of petitioner and other depositors.
Issue(s)
Whether the Central Bank of the Philippines is jointly and solidarily liable with Overseas Bank of Manila for the petitioner's time deposits due to alleged failure to exercise strict supervision; and whether a constructive trust was created in favor of the petitioner and other depositors over the properties assigned or mortgaged by Overseas Bank of Manila to the Central Bank of the Philippines. Whether the claims for recovery of time deposits and damages against the Central Bank are proper in an action for mandamus and prohibition. On the nature of bank deposits and the relationship between a depositor and a bank.
Ruling
The petition is dismissed for lack of merit. The Court held that bank deposits are in the nature of irregular deposits, which are considered loans. The depositor is a creditor, and the bank is a debtor. The failure of the bank to honor the time deposit is a failure to pay its obligation as a debtor, not a breach of trust. The claims for recovery of time deposits and damages against the Central Bank are not proper in an action for mandamus and prohibition and should be ventilated in the Court of First Instance.
Ratio Decidendi
On the issue of Central Bank's liability and constructive trust: The Court reiterated that bank deposits are considered irregular deposits and are in the nature of loans, as provided by Article 1980 of the Civil Code. This principle was established in Gullas vs. Phil. National Bank. Consequently, the petitioner, in making time deposits that earned interest, was in reality a creditor of Overseas Bank of Manila (OBM), and OBM was its debtor. The failure of OBM to honor the time deposit certificates constituted a failure to pay its obligation as a debtor, not a breach of trust arising from a depositary's failure to return the subject matter of the deposit. Therefore, the claim for joint and solidary liability against the Central Bank for alleged failure to exercise strict supervision, and the prayer for the creation of a constructive trust over OBM's assets, were not tenable under the nature of bank deposits as loans. On the propriety of mandamus and prohibition: The Court found that the claims presented by the petitioner were essentially for the recovery of time deposits plus interest from OBM and for damages against the Central Bank for its alleged failure to supervise OBM. These types of claims are not proper in actions for mandamus and prohibition. The Court noted that there was no clear abuse of discretion by the Central Bank in its exercise of supervision over OBM, and even if there were, the petitioner was not the proper party to raise that question, but rather OBM itself, as it did in G.R. No. L-29352. Furthermore, the acts of dissolving and liquidating OBM, which the petitioner intended to use as a basis for damages against the Central Bank, had already been accomplished. On the nature of bank deposits: The Court emphasized that bank deposits, whether fixed, savings, or current, are treated as loans and are covered by the law on loans. Current and savings deposits are loans to a bank because it can use the deposited funds. Similarly, time deposits, which earn interest, are also loans. This classification is fundamental to understanding the relationship between a depositor and a bank, establishing a creditor-debtor dynamic rather than a trust relationship in the context of deposit liabilities.
Main Doctrine
Bank deposits, including time deposits, are considered irregular deposits and are in the nature of loans. The depositor is a creditor, and the bank is a debtor. The bank's failure to return the deposit is a failure to pay an obligation as a debtor, not a breach of trust arising from a depositary's failure to return the subject matter of the deposit.