C-10

Serrano v. Central Bank (1980)

1980

Law on SIMPLE LOAN govern bank deposits (i.e., fixed, savings, current)

Serrano had P350K worth of time deposits in Overseas Bank of Manila. He made a series of encashment but was not successful. He filed a case against Overseas Bank & he also included the Central Bank so that the latter may also be jointly and severally liable. Serrano argued that the CB failed to supervise the acts of Overseas Bank and protect the interests of its depositors by virtue of constructive trust

WON the Central Bank is liable

NO There is no breach of trust from a banks failure to return the subject matter of the deposit. Bank deposits are in the nature of irregular deposits. All kinds of bank deposits are to be treated as loans and are to be covered by the law on loans Art.1980. In reality the depositor is the creditor while the bank is the debtor. Failure of the respondent bank to honor the time deposit is failure to pay its obligation as a debtor. By the very nature of the claims and causes of action against respondents, they in reality are recovery of time deposits plus interest from respondent Overseas Bank of Manila, and recovery of damages against respondent Central Bank for its alleged failure to strictly supervise the acts of the other respondent Bank and protect the interests of its depositors by virtue of the constructive trust created when respondent Central Bank required the other respondent to increase its collaterals for its overdrafts said emergency loans, said collaterals allegedly acquired through the use of depositors money. Petitioner here is not the proper party to raise that question, but rather the Overseas Bank of Manila.