BPI v FRANCO 2.

WON it was correct for BPI-FB to freeze Franco’s accounts and

G.R. No. 123498 preclude him from withdrawing deposits
November 23, 2007
Nachura, J. Held:
1. BPI-FB owns the deposited monies in the accounts of Franco, but
Doctrine: The deposited money in a bank is characterized as a movable – not as a legal consequence of its unauthorized transfer of FMIC’s
generic and fungible, which is governed by the NCC provisions on simple deposits to Tevesteco’s account.
loan or mutuum.
The deposit of money in banks is governed by the NCC provisions
Facts: on simple loan or mutuum. As there is a debtor-creditor relationship
 Tevesteco opened a savings and current account with BPI-FB. between a bank and its depositor, BPI-FB ultimately acquired
Soon thereafter, FMIC also opened a time deposit with the same ownership of Franco’s deposits, but such ownership is coupled with
branch. a corresponding obligation to pay him an equal amount on demand.
 Franco opened three accounts, namely, a current, savings, and Although BPI-FB owns the deposits in Franco’s accounts, it cannot
time deposit with BPI-FB. The total amount of P2M used to open prevent him from demanding payment of BPI-FB’s obligation by
these accounts is traceable to a check issued by Tevesteco. drawing checks against his current account, or asking for the
 In turn, the funding for the P2M check was part of the P80M debited release of the funds in his savings account. Thus, when Franco
by BPI-FB from FMIC’s time deposit account and credited to issued checks drawn against his current account, he had every
Tevesteco’s current account pursuant to an Authority to Debit right as creditor to expect that those checks would be honored by
purportedly signed by FMIC’s officers. BPI-FB as debtor.
 It appears, however, that the signatures of FMIC’s officers of the
Authority to Debit were forged. BPI-FB’s example based on Article 559 is inapplicable to the case.
 BPI-FB’ debited Franco’s savings and current accounts for the The stated provision pertains to a specific or determinate thing.
amounts remaining therein. But it could not be debited due to However, in this case, the deposit in Franco’s accounts
capacity limitations of BPI’s computer. consists of money, which is characterized as a movable –
 In the meantime, two checks drawn by Franco against his BPI-FB generic and fungible.
current account were dishonored and stamped with a notation
“account under garnishment.” 2. No. BPI-FB cannot unilaterally freeze Franco’s accounts to
 The dishonored checks were issued by Franco and presented for preclude him from withdrawing his deposits. BPI-FB cannot freeze
the accounts based on its mere suspicion that the funds therein
payment at BPI-FB prior to Franco’s receipt of notice that his
accounts were under garnishment. Franco’s current account was were proceeds of the multi-million peso scam Franco was allegedly
garnished by virtue of an Order of Attachment. (At the time the involved in.
notice of garnishment was served on BPI-GB, Franco had yet to be
Notes: As to the forgery issue, BPI-FB, as the trustee in the fiduciary
impleaded in the Makati case.)
relationship, is duty bound to know the signatures of its customers.
 It was only on May 15, 1990 that Franco was impleaded in the
Makati case. Immediately, upon receipt of such copy, Franco filed a
Motion to Discharge Attachment with Franco demanding the
release of his funds.
 BPI-FB’s manager, Arangorin, could not comply with the demand
as the funds had already been debited because of FMIC’s forgery
claim.
 On May 17, 1990, Franco pre-terminated his time deposit account.
 Consequently, in light of BPI-FB’s refusal to heed Franco’s
demands to unfreeze his accounts and release his deposits therein,
Franco filed with Manila RTC the subject suit.
 BPI contended that it was correct in freezing the accounts of Franco
and refusing to release his deposits, claiming that they had a better
right to the amounts
 RTC- in favor of Franco; CA- affirmed with modifications

Issues:
1. Who has a better right to the funds in Franco’s accounts