Case Digest: Serrano vs Central Bank, et.al. G.R. No L-30511

Serrano vs Central Bank, et.al. GR No L-30511, February 14, 1980

Subject: Obligations and Contracts

FACTS

Manuel Serrano made a time deposit, for one year with 6% interest of One Hundred Fifty Thousand Pesos with the Respondent Overseas Bank of Manila. Concepcion Maneja also made a time deposit, for one year with 6.5% interest of Two Hundred Thousand Pesos with Overseas Bank of Manila. Concepcion Maneja got married to Felixberto Serrano and conveyed to Manuel Serrano her time deposit of P200, 000 with OVM. Notwithstanding a series of demands for encashment of the aforementioned time deposits from the respondent Overseas Bank of Manila, dating from December 6, 1967 up to March 4, 1968, not a single one of the time deposit certificates was honoured by respondent Overseas Bank of Manila. Respondent Central Bank dissolved and liquidated the Overseas Bank of Manila. The former denied that it is a guarantor of the permanent solvency of any banking institution as claimed by the petitioner. Respondent Central Bank avers no knowledge of petitioners claim that the properties given by the respondent Overseas Bank of Manila as additional collaterals to the respondent Central Bank of the Philippines for the former’s overdrafts and emergency loans were acquired from the depositor’s money including the time deposits of the petitioner.

ISSUE

Whether or not the Central Bank is liable to pay the P350,000 time-deposit made with the Overseas Bank of Manila, with all interests due therein.

RULING

No. Central Bank is not liable to pay the P350,000 time-deposit made with all interests due.

Under the law (Art 1305, NCC), a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.

In this case, both parties overlooked the fundamental principle in the nature of bank deposits when the petitioner claimed that there should be created a constructive trust in his favour when the respondent Overseas Bank of Manila increased the collaterals in favour of the respondent Central Bank of the Philippines for the former’s overdrafts and emergency loans, since these collaterals were acquired by the use of depositor’s money.

Bank deposits are in the nature of irregular deposits. They are really loans because they earn interest. All kinds of bank deposits, whether fixed, savings or current, are to be treated as loans and are to be covered by the loans. Current and savings deposits are loans to a bank because it can use the same. The petitioner here in making time deposits that earn interests with respondent Overseas Bank of Manila was in reality a creditor of the respondent bank and not a depositor. The respondent bank was in turn a debtor of the petitioner. Failure of the respondent bank to honour the time deposit is failure to pay obligation as a debtor and not a breach of trust arising from depository’s failure to return the subject matter of the deposit for damages due to breach of trust.