G.R. No.

176697 September 10, 2014

CESAR V. AREZA and LOLITA B. AREZA, Petitioners, vs.EXPRESS SAVINGS BANK, INC. and
MICHAEL POTENCIANO, Respondents.

FACTS

Mambuay, paid petitioners with nine (9) Philippine Veterans Affairs Office (PVAO) checks payable to
different payees and drawn against the Philippine Veterans Bank (drawee), each valued at Two
Hundred Thousand Pesos (₱200,000.00) for a total of One Million Eight Hundred Thousand Pesos
(₱1,800,000.00).

Petitioners deposited the said checks in their savings account with the Bank. The Bank, inturn,
deposited the checks with its depositary bank, Equitable-PCI Bank, in Biñan,Laguna. Equitable-PCI
Bank presented the checks to the drawee, the Philippine Veterans Bank, which honored the checks.
However, the subject checks were returned by PVAO to the drawee on the ground that the amount
on the face of the checks was altered from the original amount of ₱4,000.00 to ₱200,000.00. The
drawee returned the checks to Equitable-PCI Bank by way of Special Clearing Receipts.

petitioners issued a check in the amount of ₱500,000.00. Said check was dishonored by the Bank
for the reason "Deposit Under Hold." According topetitioners, the Bank unilaterally and unlawfully put
their account with the Bank on hold.

ISSUE

Whether or not the rights of petitioners were violated by respondents when the deposits of the
former were debited by respondents without any court order and without their knowledge and
consent.

RULING

The petition is granted. The decision of the Court of Appeals were reversed and set aside. The
Petitioners are not liable for the deposit of the altered checks. The Bank, asthe depositary and
collecting bank ultimately bears the loss. Thus, there being no indebtedness to the Bank on the part
of petitioners, legal compensation cannot take place.

The Bank incurred a delay in informing petitioners of the checks’ dishonor. The Bank was informed
of the dishonor by Equitable-PCI Bank as early as August 2000 but it was only on 7 March 2001
when the Bank informed petitioners that it will debit from their account the altered amount.
G.R. No. L-20119 June 30, 1967

CENTRAL BANK OF THE PHILIPPINES, petitioner, vs.THE HONORABLE JUDGE JESUS P.

MORFE and FIRST MUTUAL SAVING AND LOAN ORGANIZATION, INC.,respondents.

FACTS

First Mutual Savings and Loan Organization, Inc. — hereinafter referred to as the Organization — is
a registered non-stock corporation, the main purpose of which, according to its Articles of
Incorporation, dated February 14, 1961, is "to encourage . . . and implement savings and thrift
among its members, and to extend financial assistance in the form of loans," to them.

On February 14, 1962, the legal department of the Central Bank of the Philippines — hereinafter
referred to as the Bank — rendered an opinion to the effect that the Organization and others of
similar nature are banking institutions, falling within the purview of the Central Bank Act.

The Central bank that published that all "savings and loan associations" now in operation and other
organizations using different corporate names, but engaged in operations similar in nature to said
"associations" HAVE NEVER BEEN AUTHORIZED BY THE MONETARY BOARD OF THE
CENTRAL BANK OF THE PHILIPPINES TO ACCEPT DEPOSIT OF FUNDS FROM THE PUBLIC
NOR TO ENGAGE IN THE BANKING BUSINESS NOR TO PERFORM ANY BANKING ACTIVITY
OR FUNCTION IN THE PHILIPPINES.

Hon. Roman Cancino, as Judge of the said municipal court, issued the warrant above referred
to, commanding the search of the aforesaid premises at No. 2745 Rizal Avenue, Manila, and the
seizure of the foregoing articles, there being "good and sufficient reasons to believe" upon
examination, under oath, of a detective of the Manila Police Department and said intelligence officer
of the Bank — that the Organization has under its control, in the address given, the aforementioned
articles, which are the subject of the offense adverted to above or intended to be used as means for
the commission of said off offense.

ISSUE

Whether or not the Municipal Judge committed a grave abuse of discretion in issuing the order in
question

RULING

The Organization is, in effect, open to the "public" for deposit accounts, and the funds so raised may
be lent by the Organization. Moreover, the power to so dispose of said funds is placed under
the exclusive authority of the "founder members," and "participating members" are expressly denied
the right to vote or be voted for, their "privileges and benefits," if any, being limited to those which the
board of trustees may, in its discretion, determine from time to time. As a consequence, the
"membership" of the "participating members" is purely nominal in nature. This situation is fraught,
precisely, with the very dangers or evils which Republic Act No. 337 seeks to forestall, by exacting
compliance with the requirements of said Act, before the transactions in question could be
undertaken.