25. SERRANO V. CENTRAL BANKG.R. No. L-30511February 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 6½% 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 Central Bank of the Philippines, alleging that they are jointly and solidarily liable for: a) the alleged failure of the Overseas Bank to return the time deposits made by petitioner and assigned to him; and b) Central Bank’s failure to exercise strict supervision over respondent Overseas Bank in protecting depositors and the general public.

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. Whether or not a constructive trust was created between the Overseas Bank and Manuel when the time deposits of Manuel were allegedly used by the Overseas Bank to acquire its additional collaterals for their loans to the Central Bank.

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 Manuel’s 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.