Scribd Logo
Upload

Welcome to Scribd!

  • 73 views

    Republic of The Philippines vs. Security Credit and Acceptance Corporation (G.R. No. L-20583, January 23, 1967)

    Uploaded by

    Judith Panggalisan
    The Supreme Court ruled that the Security and Acceptance Corporation was illegally engaged in banking operations without authorization. It was found that the corporation had established 74 branches and induced over 59,000 individuals to open savings deposit accounts totaling over 1.6 million pesos, which it then lent out. This constituted banking under Philippine law. The court ordered the dissolution of the corporation and appointment of a receiver to oversee its operations pending dissolution. In a separate case, the Supreme Court ruled in favor of a businessman whose checks bounced after withdrawing money from his account based on his bank's premature advice that a deposited check had cleared. The court found the bank did not exercise the highest degree of care required in its relationship with depositors.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Republic of The Philippines vs. Security Credit and Acceptance Corporation (G.R. No. L-20583, January 23, 1967)

    Uploaded by

    Judith Panggalisan
    73 views3 pages
    The Supreme Court ruled that the Security and Acceptance Corporation was illegally engaged in banking operations without authorization. It was found that the corporation had established 74 branches and induced over 59,000 individuals to open savings deposit accounts totaling over 1.6 million pesos, which it then lent out. This constituted banking under Philippine law. The court ordered the dissolution of the corporation and appointment of a receiver to oversee its operations pending dissolution. In a separate case, the Supreme Court ruled in favor of a businessman whose checks bounced after withdrawing money from his account based on his bank's premature advice that a deposited check had cleared. The court found the bank did not exercise the highest degree of care required in its relationship with depositors.

    Original Title

    CASES-IN-GENERAL-BANKING-LAW.docx

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The Supreme Court ruled that the Security and Acceptance Corporation was illegally engaged in banking operations without authorization. It was found that the corporation had established 74 branches and induced over 59,000 individuals to open savings deposit accounts totaling over 1.6 million pesos, which it then lent out. This constituted banking under Philippine law. The court ordered the dissolution of the corporation and appointment of a receiver to oversee its operations pending dissolution. In a separate case, the Supreme Court ruled in favor of a businessman whose checks bounced after withdrawing money from his account based on his bank's premature advice that a deposited check had cleared. The court found the bank did not exercise the highest degree of care required in its relationship with depositors.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    73 views3 pages

    Republic of The Philippines vs. Security Credit and Acceptance Corporation (G.R. No. L-20583, January 23, 1967)

    Uploaded by

    Judith Panggalisan
    The Supreme Court ruled that the Security and Acceptance Corporation was illegally engaged in banking operations without authorization. It was found that the corporation had established 74 branches and induced over 59,000 individuals to open savings deposit accounts totaling over 1.6 million pesos, which it then lent out. This constituted banking under Philippine law. The court ordered the dissolution of the corporation and appointment of a receiver to oversee its operations pending dissolution. In a separate case, the Supreme Court ruled in favor of a businessman whose checks bounced after withdrawing money from his account based on his bank's premature advice that a deposited check had cleared. The court found the bank did not exercise the highest degree of care required in its relationship with depositors.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Republic of the Philippines vs. Security Credit and Acceptance Corporation (G.R. No.

    L-20583,
    January 23, 1967)

    FACTS:
    The Solicitor General filed a petition for quo warranto to dissolve the Security and
    Acceptance Corporation, alleging that the latter was engaging in banking operations without the
    authority required therefor by the General Banking Act (Republic Act No. 337). Pursuant to a
    search warrant issued by MTC Manila, members of Central Bank intelligence division and Manila
    police seized documents and records relative to the business operations of the corporation. After
    examination of the same, the intelligence division of the Central Bank submitted a memorandum
    to the then Acting Deputy Governor of Central Bank finding that the corporation is engaged in
    banking operations.

    It was found that Security and Acceptance Corporation established 74 branches in


    principal cities and towns throughout the Philippines; that through a systematic and vigorous
    campaign undertaken by the corporation, the same had managed to induce the public to open
    59,463 savings deposit accounts with an aggregate deposit of P1,689,136.74.

    Accordingly, the Solicitor General commenced this quo warranto proceedings for the
    dissolution of the corporation, with a prayer that, meanwhile, a writ of preliminary injunction be
    issued ex parte, enjoining the corporation and its branches, as well as its officers and agents,
    from performing the banking operations complained of, and that a receiver be appointed
    pendente lite. Superintendent of Banks of the Central Bank was then appointed by the Supreme
    Court as receiver pendente lite of defendant corporation.

    In their defense, Security and Acceptance Corporation averred that the corporation had
    filed with the Superintendent of Banks an application for conversion into a Security Savings and
    Mortgage Bank, with defendants Zapa, Balatbat, Tanjutco (Pablo and Vito, Jr.), Soriano, Beltran
    and Sebastian as proposed directors.

    ISSUE:
    Whether the defendant corporation was engaged in banking operations.

    HELD:
    An investment company which loans out the money of its customers, collects the interest
    and charges a commission to both lender and borrower, is a bank. It is conceded that a total of
    59,463 savings account deposits have been made by the public with the corporation and its 74
    branches, with an aggregate deposit of P1,689,136.74, which has been lent out to such persons
    as the corporation deemed suitable therefore. It is clear that these transactions partake of the
    nature of banking, as the term is used in Section 2 of the General Banking Act. Hence, defendant
    corporation has violated the law by engaging in banking without securing the administrative
    authority required in Republic Act No. 337.
    That the illegal transactions thus undertaken by defendant corporation warrant its
    dissolution is apparent from the fact that the foregoing misuser of the corporate funds and
    franchise affects the essence of its business, that it is willful and has been repeated 59,463 times,
    and that its continuance inflicts injury upon the public, owing to the number of persons affected
    thereby.

    Associated Bank (now Westermont Bank) vs Tan (GR NO: 156940)

    FACTS:
    Respondent Tan is a businessman and a regular depositor-creditor of the petitioner,
    Associated Bank. Sometime in September 1990, he deposited a postdated check with the
    petitioner in the amount of P101,000 issued to him by a certain Willy Cheng from Tarlac. The
    check was duly entered in his bank record. Allegedly, upon advice and instruction of petitioner
    that the P101,000 check was already cleared and backed up by sufficient funds, respondent, on
    the same date, withdrew the sum of P240,000 from his account leaving a balance of P57, 793.45.
    A day after, Tan deposited the amount of P50,000 making his existing balance in the amount of
    P107,793.45, because he has issued several checks to his business partners. However, his
    suppliers and business partners went back to him alleging that the checks he issued did bounced
    for insufficiency of funds.

    Thereafter, respondent informed petitioner to take positive steps regarding the matter
    for he has adequate and sufficient funds to pay the amount of the subject checks. Nonetheless;
    petitioner did not bother nor offer any apology regarding the incident. Respondent Tan filed a
    complaint for damages on December 19,1990, with the RTC against petitioner. The trial court
    rendered a decision in favor of respondent and ordered petitioner to pay damages and Attorney’s
    fees. Appellate court affirmed the lower’s court decision. CA ruled that the bank should not have
    authorized the withdrawal of the value of the deposited check prior to its clearing. Petitioner
    filed a petition for review before the Supreme Court.

    ISSUE:
    Whether petitioner has the right to debit the amount of the dishonored check from the
    account of the respondent on the ground that the check was withdrawn by respondent prior to
    its clearing.

    HELD:

    No, the petition has no merit. The main issue here is not so much the right of petitioner
    to debit respondent’s account but, rather the manner in which it exercised such right. Banks are
    granted by law the right to debit the value of a dishonored check from a depositor’s account but
    they must do so with the highest degree of care, so as not prejudice the depositor unduly.
    The degree of diligence required of banks is more than that of a good father of a family where
    the fiduciary nature of their relationship with their depositors concerned.
    In this case, petitioner did not treat respondent’s account with the highest degree of care.
    Respondent withdrew his money his money upon the advice of petitioner that his money was
    already cleared. It is petitioner’s premature authorization of the withdrawal that caused the
    respondent’s account balance to fall to insufficient levels, and the subsequent dishonor of his
    own checks for lack of funds.

    You might also like