25. SERRANO V.

CENTRAL BANK
G.R. No. L-30511
February 14, 1980
FACTS:
In 1966, petitioner Manuel M. Serrano (Manuel) made a time deposit of P150,000, for one year
with 6% interest, with the respondent Overseas Bank of Manila (Overseas Bank), while Concepcion
Maneja (Concepcion) also made a time deposit of P200,000, for one year with 6% interest in 1967 with
the same respondent bank.
In 1968, Concepcion Maneja, married to Felixberto M. Serrano, assigned and conveyed to
petitioner Manuel M. Serrano, her time deposit of P200,000 with Overseas Bank. Despite demands for
encashment of the time deposits, Overseas Bank did not honor the time deposits.
Since 1965, the Monetary Board prohibited the Overseas Bank from making new loans and
investments due to its deficiencies against its deposit liabilities, and Central Bank also asked Overseas
Bank to increase its collaterals for its overdrafts and emergency loans from it. But, the Central Bank still
had no findings to declare the Overseas Bank as insolvent during 1966-1967.
Manuel filed a petition for mandamus and prohibition, with preliminary injunction against
Overseas Bank and its stockholders and CentralBankofthePhilippines,allegingthattheyarejointlyand
solidarilyliablefor:a) the allegedfailureoftheOverseasBanktoreturnthetimedepositsmadeby
petitioner and assigned to him; and b) Central Banks failure to exercise strict supervision over
respondentOverseasBankinprotectingdepositorsandthegeneralpublic.
Central Bank admits that it is charged with the duty of administering the banking system of the
Republic, but denies that it has the duty to watch every activity of banks. Manuel also avers that the
Overseas Bank acquired such additional collaterals for its overdrafts and loans to the Central Bank
through the use of its depositors money, including that of Manuel and Concepcion, therefore a
constructive trust was created in favor of him and Concepcion when their time deposits were made in
1966 and 1967 with the Overseas Bank.
ISSUE/S:
1. Whether or not the Overseas Bank and the Central Bank are liable to Manuel.
2.WhetherornotaconstructivetrustwascreatedbetweentheOverseasBankandManuelwhen
thetimedepositsofManuelwereallegedlyusedbytheOverseasBanktoacquireitsadditional
collateralsfortheirloanstotheCentralBank.
HELD:
1. NO. The claims of Manuel should be ventilated in the CFI (RTC) of proper jurisdiction. Claims of this
nature are not proper in actions for mandamus and prohibition as there is no shown clear abuse of
discretion by the Central Bank in its exercise of supervision over the Overseas Bank. Neither is there
anything to prohibit in this case, since the questioned acts of Central Bank (dissolution and liquidation of
the Overseas Bank) had been accomplished a long time ago.
2. NO. Bank deposits are in the nature of irregular deposits. They are 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.
Manuel, in making time deposits that earn interests with Overseas Bank, was in reality a creditor
of the Overseas Bank and not a depositor, and Overseas Bank as Manuels debtor. Failure of Overseas
Bank 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, no constructive trust was
created in favor of Manuel and the Overseas Bank.

Therefore, the Court dismissed the petition.