8/12/2019 Philippine Deposit Insurance Corporation Case

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PHILIPPINE DEPOSIT INSURANCE CORPORATION vs.

THE HONORABLE COURT OF APPEALS and JOSE ABAD, LEONOR ABAD, SABINA ABAD,

JOSEPHINE "JOSIE" BEATA ABAD-ORLINA, CECILIA ABAD, PIO ABAD, DOMINIC ABAD,

TEODORA ABAD

FACTS:

The respondents, Jose Abad et. al., had individually and jointly with each other 71certificates of time deposits (Golden Time Deposits - GTD) with aggregate amount ofP1,115,889.96 in MBC. However the monetary board of the Bangko Sentral ng Pilipinas issuedan order prohibiting MBC to do business in the Philippines on May, 22, 1987, a Friday, whichwas not served on MBC until Tuesday, or on May 26, 1987.

On May 25, 1987, Jose Abad pre-terminated the deposits and re-deposited the fundsthereof into new GTDs of P40,000.00 each or less. The remaining amount were withdrawn inthe value of P320,000.00.

PDIC paid respondents the value of 3 claims in the total amount of P120,000.00 butwithheld the payment of the 17 remaining accounts after the receiver of the MBC submittedreport to PDIC that there was massive conversion and substitution of trust and deposits on May25, 1987 by Abad at MBC-Iloilo. It alleged that such transactions were not made in the usualcourse of business and therefore, PDIC cannot be made liable for the deposits subject thereof.

PDIC filed a petition for declaratory relief against respondents before the RTC for a judicial declaration determination of the insurability of the respondents GTDs. On the other

hand, respondents set up a counterclaim against PDIC whereby they asked for payment of theirinsured deposits.

ISSUE:

Whether or not the bank transactions Abad made were in the regular course ofbusiness.

RULING:

Yes. The PDIC failed to overcome the presumption that the ordinary course of business was notfollowed when Jose Abad re-deposited their accounts under new GTDs. Respondents weregiven the benefit of a doubt that they were not aware that the monetary board resolution waspassed prohibiting Manila Banking Corporation from conducting business on May 22, 1987onwards. Finally, petitioner faults respondents for availing of the statutory limits of the PDIClaw, presupposing that, based on the conduct of respondent Jose Abad on March 25, 1987, heand his co respondents "somehow knew" of the impending closure of MBC. Petitioner ascribesbad faith to respondent Jose Abad in transacting the questioned deposits, and seeks to

disqualify him from availing the benefits under the law, was not established. Good faith ispresumed. This, petitioner failed to overcome since it offered mere presumptions as evidenceof bad faith.