GR 118917; (December, 1997) (Digest)
G.R. No. 118917 December 22, 1997
PHILIPPINE DEPOSIT INSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS, ROSA AQUERO, GERARD YU, ERIC YU, MINA YU, ELIZABETH NGKAION, MERLY CUESCANO, LETICIA TAN, FELY RUMBANA, LORNA ACUB, represented by their Attorney-in-Fact, JOHN FRANCIS COTAOCO, respondents.
FACTS
Private respondents invested in money market placements with Premiere Financing Corporation (PFC) and were issued promissory notes and checks. When their attorney-in-fact, John Francis Cotaoco, went to PFC to encash these, he was referred to Regent Savings Bank (RSB). Instead of payment, RSB issued thirteen (13) Certificates of Time Deposit (CTDs) in exchange, each for P10,000.00, bearing 14% interest, maturing on November 3, 1983, and stating they were insured by the Philippine Deposit Insurance Corporation (PDIC). Upon maturity, RSB failed to pay and advised Cotaoco to file a claim with PDIC. Subsequently, the Monetary Board suspended and later liquidated RSB. Private respondents filed claims with PDIC, which were denied on the ground that the Traders Royal Bank check issued by PFC to fund the CTDs was dishonored for insufficient funds, resulting in the cancellation of the certificates as liabilities of RSB. Private respondents then filed a collection case against PDIC, RSB, and the Central Bank. The trial court held them liable, and the Court of Appeals affirmed with modification, dismissing the appeal of PDIC. PDIC filed this petition.
ISSUE
Whether the Philippine Deposit Insurance Corporation (PDIC) is liable to private respondents for the value of the Certificates of Time Deposit (CTDs).
RULING
No. The Supreme Court reversed the decision of the Court of Appeals and absolved PDIC from liability. The Court held that PDIC’s liability is statutory, governed by Republic Act No. 3591 , as amended, and rests upon the existence of a valid deposit. A “deposit” under the law requires the unpaid balance of money or its equivalent received by a bank. The evidence showed that the CTDs were issued without RSB receiving any money because the check from PFC used to fund them was dishonored. Therefore, no deposit was created. The negotiability or non-negotiability of the CTDs is immaterial to PDIC’s statutory liability. Furthermore, the statement on the CTDs that they were insured by PDIC is not binding on the corporation; liability is determined solely by the provisions of the law. Since no deposit existed, PDIC has no insurance liability.