BPI v. CA [G.R. No. 104612, May 10, 1994]
Private respondents Eastern Plywood Corp. (Eastern) and Benigno D. Lim (Lim), an officer and stockholder of Eastern, held at least one joint bank account with Commercial Bank and Trust Co. (CBTC) (now known as BPI). Sometime in March 1975, a joint checking account (“and” account) with Lim in the amount of P120,000.00 was opened by Mariano Velasco. Velasco died on 7 April 1977. An Indemnity Undertaking was executed by Lim for himself as President and General Manager of Eastern, wherein one-half of the outstanding balance was provisionally released and transferred to one of the bank accounts of Eastern with CBTC.
Eastern obtained a loan on 18 August 1978 from CBTC as “Additional Working Capital,” evidenced by the “Disclosure Statement on Loan/Credit Transaction”. The loan was payable on demand with interest at 14% per annum. For this loan, Eastern issued on the same day a negotiable promissory note which was signed by Lim, both in his own capacity and as President and General Manager of Eastern. No reference to any security for the loan appears on the note.
In addition, Eastern and Lim, and CBTC signed another document entitled “Holdout Agreement,”  wherein it was stated that as security for the Loan [Lim and Eastern] have offered [CBTC] and the latter accepts a holdout on said Current Account in the joint names of Lim and Velasco.
After CBTC was merged with BPI, BPI filed a complaint against Lim and Eastern demanding payment  of the promissory note for P73,000.00. Defendants Lim and Eastern, in turn, filed a counterclaim against BPI for the return of the balance in  the disputed account subject of the Holdout Agreement and the interests thereon after deducting the amount due on the promissory note.
1) Whether BPI can demand payment of the loan of P73,000.00 despite the existence of the Holdout Agreement.
2) Whether BPI is still liable to the private respondents on the account subject of the Holdout Agreement after its withdrawal by the heirs of Velasco.
In Serrano v. Central Bank of the Philippines, we held that bank deposits are in the nature of irregular deposits; they are really loans because they earn interest. The relationship then between a depositor and a bank is one of creditor and debtor. The deposit under the questioned account was an ordinary bank deposit; hence, it was payable on demand of the depositor.
1) Yes. The collection suit of BPI is based on the promissory note for P73,000.00. On its face, the note is an unconditional promise to pay the said amount. CBTC, or BPI as its successor-in-interest, had every right to demand that Eastern and Lim settle their liability under the promissory note. It cannot be compelled to retain and apply the deposit in Lim and Velasco’s joint account to the payment of the note. What the agreement conferred on CBTC was a power, not a duty. Generally, a bank is under no duty or obligation to make the application. To apply the deposit to the payment of a loan is a privilege, a right of set-off which the bank has the option to exercise.
2) Yes. The account was proved and established to belong to Eastern even if it was deposited in the names of Lim and Velasco. As the real creditor of the bank, Eastern has the right to withdraw it or to demand payment thereof. BPI cannot be relieved of its duty to pay Eastern simply because it already allowed the heirs of Velasco to withdraw the whole balance of the account. The petitioner should not have allowed such withdrawal because it had admitted in the Holdout Agreement the questioned ownership of the money deposited in the account. As early as 12 May 1979, CBTC was notified by the Corporate Secretary of Eastern that the deposit in the joint account of Velasco and Lim was being claimed by them and that one-half was being claimed by the heirs of Velasco


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