TOPIC Deposit; Art.

1980
CASE NO. G.R. No. L-30511
CASE NAME Serrano v. Central Bank of the Philippines
MEMBER Geoffrey Tungol

DOCTRINE
1.) Bank deposits are 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 law on loans

RECIT-READY DIGEST

Manuel Seranno made a one-year time deposit with 6% interest with Respondent Overseas Bank of Manila (OBM) on oct
1966. March 1967 Concepcion Maneja (Concepcion) also made a one-year Time deposit with 6.5% interest for 200,000.00
PHP with the same Respondent OBM. Serrano was assigned and conveyed of Concepcion’s Time deposit when she
married Felizberto Serrano (family member of Manuel). OBM was placed under the supervision of Central bank on 1965.
The banks were not insolvent during the years 1966-1967. Seranno was unable to claim the deposits from OBM and now
wants to get their money from Central bank.

ISSUE: W/N Central bank will be liable to pay the Petitioners – NO

“No, Bank deposits are 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 law on loans. Current and savings
deposit 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 petitioner. Failure of OBM to honor the time deposit is failure to pay its obligation
as a debtor and not a breach of trust arising from depositary’s failure to return the subject matter of the deposit”

Thus, Central bank is not liable to pay Serranno. The petitioner's remedy is to file his claim in the liquidation proceeding,
not directly against Central bank.

FACTS
• On October 13, 1966 and December 12, 1966 Petitioner Manuel Serrano (Serrano) made a one-year time deposit
with 6% interest for 150,000.00 Php with Respondent Overseas Bank of Manila (OBM)
• On March 1967 Concepcion Maneja (Concepcion) also made a one-year Time deposit with 6.5% interest for
200,000.00 PHP with the same Respondent OBM
• On August 31, 1968, Concepcion, married to Felixberto M. Serrano, assigned and conveyed to petitioner Serrano,
her (Concepcion) time deposit of P200,000.00 with respondent OBM
• Despite demands, none of the time deposits were honored by OBM
• “Respondent Central Bank claims that as of March 12, 1965, the Overseas Bank of Manila, while operating, was
only on a limited degree of banking operations since the Monetary Board decided in its Resolution No. 322, dated
March 12, 1965, to prohibit the Overseas Bank of Manila from making new loans and investments in view of its
chronic reserve deficiencies against its deposit liabilities. “
• In the years 1966- 1967, there were no findings to declare the respondent Overseas Bank of Manila as insolvent.
• This limited operation of respondent Overseas Bank of Manila continued up to 1968.
• Respondent Central Bank denied that a constructive trust was created in favor of petitioner and his predecessor
in interest Concepcion Maneja when their time deposits were made in 1966 and 1967 with OBM as during that
time the latter was not an insolvent bank.

1
 • Along with this case was the attempt of Serrano to prevent Central Bank from closing, declaring insolvent, and
liquidating the assets of OBM in another case named “Emerito M. Ramos, et al. vs. Central bank of the
Philippines.” This was denied on the threat that allowing such would open the flood gates of thousands of
depositors that have investments within OBM.
• The resolution in the case above resulted into OBM to be placed under receivership of the Central bank and
“participate in clearing, direct the suspension of its operation, and ordering the liquidation of said bank (OBM)”
• Now Petitioners filed this case in order to get back the 350,000.00 PHP One-year Time deposits with interest.

ISSUE/S and HELD

W/N Central bank will be liable to pay the Petitioners - NO

RATIO

On the issue on W/N Central bank will be liable to pay the Petitioners - NO
1.
a. Bank deposits are 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 law on
loans.
b. The petitioner here in making time deposits that earn interests with OBM was a creditor of the respondent
bank and not a depositor. The respondent bank was in turn a debtor of petitioner. Failure of OBM to honor
the time deposit is failure to pay its obligation as a debtor and not a breach of trust arising from a depositary’s
failure to return the subject matter of the deposit.
c. However, it is not the Central Bank's ministerial duty to pay petitioner's time deposits or to hold the mortgaged
properties in trust for the depositors of the Overseas Bank of Manila.
d. Since the Overseas Bank of Manila was found to be insolvent and the Superintendent of Banks was ordered
to take over its assets preparatory to its liquidation.
e. petitioner's remedy is to file his claim in the liquidation proceeding, not directly against Central bank.

DISPOSTIVE PORTION

WHEREFORE, the petition is dismissed for lack of merit, with costs against petitioner.

SEPARATE OPINION/S

Aquino J. CONCURRING

Main Point: The petitioner prayed that the Central Bank be ordered to pay his time deposits of P350,000, plus interests,
which he could not recover from the distressed Overseas Bank of Manila, and to declare all the assets assigned or
mortgaged by that bank and the Ramos group to the Central Bank as trust properties for the benefit of the petitioner and
other depositors. Stated Points D and E of the Ratio, which were not explained by the main case but applies.