Overtaken by events

This is the unfortunate story of a couple who placed their lifetime savings in a bank and lost all of it despite what they thought was a timely legal move on their part.

Between 1982 and 1984, the Santos couple opened and maintained both time and savings deposits with a development bank located in Metro Manila. Their deposits totaled about P950,000. When some of the time deposit certificates matured, the couple was not able to withdraw them in cash. Instead, the bank issued a manager’s check which was dishonored upon presentation for payment.

So the Santoses demanded payment and withdrawal of all their deposits. But the bank likewise failed to comply with their demands. This prompted the couple to file a complaint in court with a writ of preliminary attachment. The court ordered the issuance of a writ of attachment and pursuant thereto one of the properties of the bank was attached.

While the case was pending, the Central Bank decided to place the bank under receivership after finding that its condition was one of insolvency and its continuance in business would result in probable loss to its depositors and creditors.

Thereafter, the couple obtained a judgment against the bank and filed a motion for immediate execution so that their attachment will become permanent. The court however, stayed the execution of the judgment because the bank was already placed under receivership. Was the court correct?

Yes. To execute the judgment would unduly deplete the assets of the respondent bank to the obvious prejudice of the other depositors and creditors because after the Monetary Board declared that a bank is insolvent and has ordered it to cease operations, the board becomes the trustee of its assets for the equal benefit of all the creditors.

One depositor or creditor cannot obtain an advantage or a preference over another by an attachment of properties of the bank. After a declaration of insolvency, the remedy of the depositors is to intervene in the liquidation proceedings. This is the ruling in the case of Lipana vs. Development Bank of Rizal 154 SCRA 257.

Of course, if this case happens now, the couple can recover part of the deposit insured by the PDIC.

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Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

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