CASE 01

G.R. No. 104612, May 10, 1994

BANK OF THE PHILIPPINE ISLANDS (SUCCESSOR-IN INTEREST OF COMMERCIAL BANK AND
TRUST CO.), PETITIONER, VS. HON. COURT OF APPEALS, EASTERN PLYWOOD CORP. AND
BENIGNO D. LIM, RESPONDENTS.

FACTS:
In 1978, Eastern obtained a loan of P73,000 from Commercial Bank and Trust Co covered by a promissory
note with typewritten words “Hold-Out” on remaining balance of P331,261.44 of current account previously
opened by Velasco and Lim, the latter an officer of Eastern.

Upon death of Velasco, the account balance above-mentioned was being claimed as part of his estate. The
intestate court granted the motion of the heirs of Velasco to withdraw the deposit under the joint account of
Lim and Velasco.

Sometime in 1987, BPI (successor of CBTC) filed a complaint against Lim and Eastern demanding
payment of the promissory note for P73,000.00. Defendants Lim and Eastern, in turn, filed a counterclaim
against BPI for the return of the balance in the disputed account subject of the Holdout Agreement and the
interests thereon after deducting the amount due on the promissory note.

ISSUE:
Can BPI can demand payment of the loan despite the existence of the Holdout Agreement and whether
BPI is still liable to the private respondents on the account subject of the Holdout Agreement after its
withdrawal by the heirs of Velasco?

RULING:
Generally, a bank is under no duty or obligation to make the application. To apply the deposit to the
payment of a loan is a privilege, a right of set-off which the bank has the option to exercise.

The account was proved and established to belong to Eastern even if it was deposited in the names of Lim
and Velasco. As the real creditor of the bank, Eastern has the right to withdraw it or to demand payment
thereof. BPI cannot be relieved of its duty to pay Eastern simply because it already allowed the heirs of
Velasco to withdraw the whole balance of the account. The petitioner should not have allowed such
withdrawal because it had admitted in the Holdout Agreement the questioned ownership of the money
deposited in the account.
CASE 02
G.R. No. 66826, August 19, 1988
BANK OF THE PHILIPPINE ISLANDS, PETITIONER, VS. THE INTERMEDIATE APPELLATE COURT
AND RIZALDY T. ZSHORNACK, RESPONDENTS.

FACTS
Spouses Zshornack maintained a dollar savings account and a peso current account with Comtrust. An
application for a dollar draft was accomplished by Garcia branch manager of COMTRUST payable to a
certain Dizon. In the application, Garcia indicated that the amount was to be charged to the dollar savings
account of the Zshornacks. There was no indication of the name of the purchaser of the dollar draft.
Comtrust issued a check payable to the order of Dizon. When Zshornack noticed the withdrawal from his
account, he demanded an explanation from the bank. In its answer, Comtrust claimed that the peso value
of the withdrawal was given to Atty. Ernesto Zshornack, brother of Rizaldy.

ISSUE:
Whether the contract between petitioner and respondent bank is a deposit.

RULING:
The document and the subsequent acts of the parties show that they intended the bank to safekeep the
foreign exchange, and return it later to Zshornack. The parties did not intend to sell the US dollars.
Otherwise, the contract of depositum would never have been entered into at all.
NO. 03
G.R. No. 90027, March 03, 1993
CA AGRO-INDUSTRIAL DEVELOPMENT CORP., PETITIONER, VS. THE HONORABLE COURT OF
APPEALS AND SECURITY BANK AND TRUST COMPANY, RESPONDENTS.

FACTS:
Petitioner, through Aguirre, purchased from spouses Pugao 2 parcels of land. They agreed that the titles
thereto shall be transferred upon full payment and that the owner's copies of the certificates of titles thereto
shall be deposited in a safety deposit box of Security Bank and Trust Company. Thereafter, Ramos offered
to buy from the petitioner the said lots and demanded the execution of a deed of sale. In view thereof,
Aguirre, accompanied by the Pugaos, then proceeded to the respondent Bank to open the safety deposit
box and get the certificates of title. However, when opened in the presence of the Bank's representative,
the box yielded no such certificates.

Because of the delay in the reconstitution of the title, Ramos withdrew her earlier offer to purchase the lots;
as a consequence thereof, the petitioner allegedly failed to realize the expected profit. Hence, petitioner
filed a complaint for damages against the respondent Bank.

ISSUE:
Was there a contract of deposit?

RULING:
Yes. The case at bar is a special contract of deposit. It cannot be characterized as an ordinary contract of
lease under Article 1643 because the full and absolute possession and control of the safety deposit box
was not given to the joint renters -- the petitioner and the Pugaos. The guard key of the box remained with
the respondent Bank; without this key, neither of the renters could open the box. On the other hand, the
respondent Bank could not likewise open the box without the renter's key.
NO. 04
G.R. No. L-25748, March 10, 1975
CONSOLIDATED TERMINALS, INC., PLAINTIFF-APPELLANT, VS. ARTEX DEVELOPMENT CO., INC.,
DEFENDANT-APPELLEE.

FACTS:
Consolidated Terminals, Incorporated (CTI) operator of a customs bonded warehouse, received on deposit
193 bales of raw cotton. It was understood that CTI would keep the cotton in behalf of Luzon Brokerage
Corporation until the consignee, Paramount Textile Mills, Inc., had opened the corresponding letter of credit
in favor of shipper, Adolph Hanslik Cotton of Corpus Christi, Texas.

Allegedly by virtue of a forged permit to deliver imported goods, purportedly issued by the Bureau of
Customs, Artex was able to obtain delivery of the bales of cotton.  At the time the merchandise was
released to Artex, the letter of credit had not yet been opened

ISSUE:
Whether a warehouseman who delivers the goods to one who is not in fact lawfully entitled to the
possession of them shall be liable as for conversion to all having a right of property or possession in the
goods.

RULING:
It does not clearly show that, as warehouseman, it has a cause of action for damages against Artex. The
real parties interested in the bales of cotton were Luzon Brokerage Corporation as depositor, Paramount
Textile Mills, Inc. as consignee, the shipper and the Commissioners of Customs and Internal Revenue with
respect to the duties and taxes. These parties have not sued CTI for damages or for recovery of the bales
of cotton or the corresponding taxes and duties.
NO. 05
G.R. No. L-30896, April 28, 1983
JOSE O. SIA, PETITIONER, VS. THE PEOPLE OF THE PHILIPPINES, RESPONDENT.

FACTS:
NO. 06
G.R. No. L-23033, January 05, 1967
LUA KIAN, PLAINTIFF-APPELLEE, VS. MANILA RAILROAD COMPANY AND MANILA PORT SERVICE,
DEFENDANTS-APPELLANTS.

FACTS:
Plaintiff-appellee filed a suit against the Manila Railroad., Co., and Manila Port Service for the recovery of
the invoice value of imported evaporated Carnation milk alleged to have been undelivered. It appears that
of the 2,000 cases indicated in the bill of lading of plaintiff-appellee, only 1,829 cases has been delivered.
The 171 cases was released in favor of the other consignee, Cebu United, which 3,171 cases marked
under its name when in fact only 3,000 was indicated in its bill lading.

ISSUE:
Whether or not defendants can be held liable for the undelivered items.

RULING:
The legal relationship between an arrastre operator and the consignee is akin to that of a depositor and
warehouseman. As custodian of the goods discharged from the vessel, it was defendant arrastre operator's
duty, like that of any ordinary depositary, to take good care of the goods and to turn them over to the party
entitled to their possession. Under this particular set of circumstances, said defendant should have withheld
delivery because of the discrepancy between the bill of lading and the markings and conducted its own
investigation.
NO. 07
G.R. No. 6, November 14, 1901
MANUEL GARCIA GAVIERES, PLAINTIFF AND APPELLANT, VS. T. H. PARDO DE TAVERA,
DEFENDANT AND APPELLEE

FACTS:
“Received of Senorita Igcacia de Gorricho the sum of 3,000 pesos, gold (3,000 pesos), as a deposit
payable on two months' notice in advance, with interest at 6 per cent per annum with an hypothecation of
the goods now owned by me or which may be owned hereafter, as security of the payment.”

ISSUE:
Is the above statement evidence of a contract of deposit?

RULING:
No. Although in the document in question a deposit is spoken of, nevertheless from an examination of the
entire document it clearly appears that the contract was a loan and that such was the intention of the
parties. It unnecessary to recur to the canons of interpretation to arrive at this conclusion. The obligation of
the depositary to pay interest to the depositor suffices to cause the obligation to be considered as a loan
and makes it likewise evident that it was the intention of the parties that the depositary should have the
right to make use of the amount deposited, since it was stipulated that the amount could be collected after
notice of two months in advance.
NO. 08
G.R. No. L-30511, February 14, 1980
MANUEL M. SERRANO, PETITIONER, VS. CENTRAL BANK OF THE PHILIPPINES; OVERSEAS BANK
OF MANILA: EMERITO M. RAMOS, SUSANA B. RAMOS, EMERITO B. RAMOS, JR., JOSEFA RAMOS
DELA RAMA, HORACIO DELA RAMA, ANTONIO B. RAMOS, FILOMENA RAMOS LEDESMA, RODOLFO
LEDESMA, VICTORIA RAMOS TANJUATCO, AND TEOFILO TANJUATCO, RESPONDENTS.

FACTS:
Petitioner made a time deposit of One Hundred Fifty Thousand Pesos (P150,000.00) with the respondent
Overseas Bank of Manila. Concepcion Maneja also made a time deposit of Two Hundred Thousand Pesos
(P200,000.00) with the same respondent bank. Thereafter, Maneja assigned and conveyed to petitioner,
her time deposit of P200,000.00 with respondent bank. Notwithstanding series of demands for encashment
of the aforementioned time deposits from the respondent bank, not a single one of the time deposit
certificates was honored.

ISSUE:
Was there a contract of deposit?

RULING:
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 law on loans.

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 the respondent Bank 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.
NO. 09
G.R. No. 43191, November 13, 1935
PAULINO GULLAS, PLAINTIFF AND APPELLANT, VS. THE PHILIPPINE NATIONAL BANK,
DEFENDANT AND APPELLANT.

FACTS:
The Treasurer of the United States issued a warrant payable to the order of Francisco Bacos. Gullas and
Lopez signed as indorsers of this check. Thereupon it was cashed by the Philippine National Bank but was
dishonored by the Insular Treasurer.

The appellant bank, on learning of the dishonor, sent notices by mail to Mr. Gullas and Lopez. They were
informed that the United States Treasury warrant payable to the order of Bacos, the payment for which had
been received has been returned have the notation that the payment of his check has been stopped by the
Insular Treasurer. In view of this therefore, the appellant bank have applied the outstanding balances of
Gullas current account for payment of the foregoing check.

ISSUE:
Does Philippine National Bank has the right to apply a deposit to the debt of a depositor to the bank?

RULING:
As a general rule, a bank can compensate a debtor’s debt with a debtor’s deposit because insofar as the
deposit is concerned, the relationship between them is that of debtor and creditor. In this case, however, as
to an indorser the situation is different, and notice should actually have been given him in order that he
might protect his interests.