CREDIT TRANSACTIONS CASE DIGEST
BPI FAMILY BANK VS. FRANCO,
G. R. NO. 123498, 23 NOVEMBER 2007

 

TOPIC/DOCTRINE

The quality of being fungible depends upon the possibility of the property, because of its nature or the will of the parties, being substituted by others of the same kind, not having a distinct individuality.

FACTS

Franco opened three accounts, namely, a current,4 savings,5 and time deposit,6 with BPI-FB. The current and savings accounts were respectively funded with an initial deposit of P500,000.00 each, while the time deposit account had P1,000,000.00 with a maturity date of August 31, 1990. The total amount of P2,000,000.00 used to open these accounts is traceable to a check issued by Te-vesteco allegedly in consideration of Franco’s introduction of Eladio Teves, who was looking for a conduit bank to facilitate Tevesteco’s business transactions, to Jaime Sebastian, who was then BPI-FB SFDM’s Branch Manager. In turn, the funding for the P2,000,000.00 check was part of the P80,000,000.00 debited by BPI-FB from FMIC’s time deposit account and credited to Tevesteco’s current account pursuant to an Authority to Debit purportedly signed by FMIC’s officers. It appears that the signatures of FMIC’s officers on the Authority to Debit were forged. Unfortunately, Tevesteco had already effected several withdrawals from its current account (to which had been credited the P80,000,000.00 covered by the forged Authority to Debit) amounting to P37,455,410.54, including the P2,000,000.00 paid to Franco.

On September 8, 1989, impelled by the need to protect its interests in light of FMIC’s forgery claim, BPI-FB instructed Jesus Arangorin to debit Franco’s savings and current accounts for the amounts remaining therein. In the meantime, two checks drawn by Franco against his BPI-FB current account were dishonored upon presentment for payment, and stamped with a notation “account under garnishment.”  BPI-FB urges the court that the legal consequence of FMIC’s forgery claim is that the money transferred by BPI-FB to Tevesteco is its own, and considering that it was able to recover possession of the same when the money was redeposited by Franco, it had the right to set up its ownership thereon and freeze Franco’s accounts. To bolster its position, BPI-FB cites Article 559 of the Civil Code.

 

ISSUE

Whether Franco had a better right to the deposits in the subject accounts which are part of the proceeds of a forged Authority to Debit.

RULING

            The court held in the affirmative and that BPI’s position is unsound.

The court held that the movable property mentioned in Article 559 of the Civil Code pertains to a specific or determinate thing. A determinate or specific thing is one that is individualized and can be identified or distinguished from others of the same kind.

Here, the court held that the deposit in Franco’s accounts consists of money which, albeit characterized as a movable, is generic and fungible. The quality of being fungible depends upon the possibility of the property, because of its nature or the will of the parties, being substituted by others of the same kind, not having a distinct individuality. Moreover, BPI-FB conveniently forgets that the deposit of money in banks is governed by the Civil Code provisions on simple loan or mutuum. As there is a debtor-creditor relationship between a bank and its depositor, 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. Thus, when Franco issued checks drawn against his current account, he had every right as creditor to expect that those checks would be honored by BPI-FB as debtor.