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BPI v. Franco

BPI Family Bank v. Amado Franco and CA involved a dispute over deposits in Amado Franco's bank accounts at BPI Family Bank. [1] BPI suspected the deposits of around 2 million pesos were related to a larger fraudulent transaction involving forged documents. [2] However, the court ruled that under Philippine civil law, deposits establish a debtor-creditor relationship where the bank is obligated to repay equal amounts to the depositor. [3] Therefore, BPI did not have the unilateral authority to freeze Franco's accounts without a court order given its obligations to Franco as a depositor.

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52 views2 pages

BPI v. Franco

BPI Family Bank v. Amado Franco and CA involved a dispute over deposits in Amado Franco's bank accounts at BPI Family Bank. [1] BPI suspected the deposits of around 2 million pesos were related to a larger fraudulent transaction involving forged documents. [2] However, the court ruled that under Philippine civil law, deposits establish a debtor-creditor relationship where the bank is obligated to repay equal amounts to the depositor. [3] Therefore, BPI did not have the unilateral authority to freeze Franco's accounts without a court order given its obligations to Franco as a depositor.

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BPI Family Bank v.

Amado Franco and CA


G.R. No. 123498

Doctrine: The deposit of money in banks is governed by the Civil Code provisions on
simple loan or mutuum.

Facts:
 15 Aug 1989: Tevetesco Arrastre-Stevedoring Co., Inc. opened a savings and
current account with BPI-FB (petitioner)
 25 Aug: First Metro Investment Corporation (FMIC) also opened a time deposit
account with the same branch of BPI–FB (San Francisco del Monte) in a series
of transactions
 31 Aug: Amado Franco (respondent) opened three (3) accounts (current,
savings, and time-deposit) with BPI-FB. Total amount of P2M used to open these
accounts is traceable to a check issued by Tevetesco allegedly in consideration
of respondent Franco’s introduction of Eladio Teves (looking for a conduit bank to
facilitate Tevetesco’s business transactions) to Jaime Sebastian (BPI-FB’s
branch manager). The P2M is part of the P80M debited by BPI-FB from FMCI’s
time deposit account and credited to Tevetesco’s current account pursuant to an
Authority to Debit allegedly signed by FMCI’s officers which appears to be
forged.
o Current: Initial deposit of P500K
o Savings: Initial deposit of P500K
o Time deposit: P1M with maturity date of 31 Aug 1990
 4 Sept: Antonio Ong, upon being shown the Authority to debit, personally
declared his signature to be a forgery.
 Tevetesco already effected several withdrawals from its current account
amounting to P37,455,410.54 including the P2M paid to respondent Franco.
 8 Sept: BPI-FB, through Senior VP Severino Cornamcion, instructed Jesus
Arangorin to debit Franco’s savings and current accounts from the amounts
remaining therein but the latter’s time deposit account could not be debited due
to computer limitations.
 2 checks drawn by Franco against BPI-FB current account were dishonored
upon presentment for payment and stamped with notation account under
garnishment.
 As to respondent Franco’s savings account, he agreed to an arrangement as a
favor to Sebastian where P400K from said account was temporarily transferred
to Domingo Quiaoit’s savings account, subject to its immediate return upon
issuance of a certificate of deposit which Quiaoit needed in connection with his
visa application at the Taiwan Embassy.
 RTC rendered judgment in favor of respondent Franco ordering Petitioner BPI-
FB to pay sums of money
 CA modified the decision but the Petitioner BPI-FB still needs to pay interest
deducted from the time-deposit of Franco plus damages.

ISSUE: Who has a better right to deposits in respondent Franco’s accounts?

Held:
The deposit of money in banks is governed by the Civil Code provisions on simple
loan or mutuum. BPI-FB ultimately acquired ownership of Franco's deposits, but
such ownership is coupled with a corresponding obligation to pay him an equal
amount on demand. Although BPI-FB owns the deposits in Franco's accounts, it
cannot prevent him from demanding payment of BPI-FB's obligation by drawing
checks against his current account, or asking for the release of the funds in his
savings account.

BPI-FB does not have a unilateral right to freeze the accounts of Franco based on its
mere suspicion that the funds therein were proceeds of the multi-million peso scam
Franco was allegedly involved in. To grant BPI-FB the right to take whatever action it
pleases would open the floodgates of public distrust in the banking industry.
BPI-FB is duty-bound to know the signatures of its customers. Having failed to
detect the forgery and in the process inadvertently facilitate the FMIC-Tevesteco
transfer, BPI-FB cannot now shift liability thereon to Franco and the other payees of
checks issued by Tevesteco, or prevent withdrawals from their respective accounts
without the appropriate court writ or a favorable final judgment.

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