GR 43682; (March, 1938) (Digest)
G.R. No. 43682 ; March 31, 1938
In Re Liquidation of Mercantile Bank of China. TAN TIONG TICK, claimant-appellant, vs. AMERICAN APOTHECARIES CO., ET AL., claimants-appellees.
FACTS
In the liquidation proceedings of the Mercantile Bank of China, appellant Tan Tiong Tick filed a claim. He had a current account balance (P7,390.11) and a savings account balance (P20,000) with the bank, but also owed the bank P13,778.90 for obligations under trust receipts. He sought to set off his debt against his deposits, leaving a net credit of P13,611.21, and asked the court to declare this balance a preferred credit. The court-appointed commissioner recommended treating the net claim as an ordinary credit and disallowing interest. The lower court approved this recommendation.
ISSUE
1. Whether the net claim resulting from the set-off of mutual debts between the bank and a depositor-debtor is a preferred credit.
2. Whether the claimant is entitled to interest on his deposits.
RULING
1. No. The net claim is an ordinary, not a preferred, credit. The Court held that current and savings deposits are mercantile contracts governed by the Code of Commerce, not the Civil Code provisions on irregular deposit. In the liquidation of an insolvent bank, such deposits do not enjoy preference. The right of compensation or set-off is recognized, but the resulting balance does not acquire a preferred status simply because the original deposits might have been considered preferred if standing alone. The set-off is allowed as a matter of individual account liquidation under the relevant banking law.
2. Interest is allowed only up to the date the bank ceased operations (September 19, 1931). Interest earned in the ordinary course of business before liquidation is payable. However, no interest is allowed from the date of suspension/liquidation onwards, as it would be anomalous and unjust in an insolvency where assets are insufficient to pay all obligations in full. The appealed decision was affirmed, declaring the appellant’s net claim of P13,611.21 as an ordinary credit with interest only up to September 19, 1931.
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