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SPS. GODFREY v. FAR EAST BANK

FACTS:

This case originated from a compromise judgment entered into by the parties. The spouses Serfino filed an action for collection of sum of money against the spouses Cortez. They eventually entered into a compromise agreement wherein the spouses Cortez acknowledged their debt and agreed to pay it using Magdalena's retirement benefits. If they default on the payment, the debt may be executed against their properties subject to execution. The spouses Cortez later deposited the retirement benefits in the savings account of their daughter-in-law, Grace, with FEBTC. The spouses Serfino sent letters to FEBTC claiming ownership of the deposit due to an assignment made in their favor by the spouses Cortez. When the spouses Serfino filed a case to recover the deposit and for damages, FEBTC allowed Grace to withdraw a portion of the deposit. The RTC absolved FEBTC from liability, stating that the bank was not party to the compromise judgment. The spouses Serfino appealed, arguing that the bank should have withheld the deposit upon receiving their notice of adverse claim. They also cited provisions in the Civil Code and claimed that FEBTC's actions caused them damages. FEBTC maintained that it was only bound by its contract of loan with Grace and not by the compromise judgment. The case involves the determination of the obligation of banks when a third party claims rights over a bank deposit in another person's name.

ISSUES:

  1. Whether FEBTC is liable for allowing Grace to withdraw the deposit despite the adverse claim made by the spouses Serfino.

  2. Whether FEBTC is bound by the compromise judgment between the spouses Serfino and the spouses Cortez.

  3. Whether FEBTC is obligated to return the deposit to the spouses Serfino upon demand.

RULING:

  1. FEBTC is not liable for allowing Grace to withdraw the deposit. The court ruled that FEBTC was not a party to the compromise judgment, and there was no valid court order or process requiring FEBTC to withhold payment of the deposit. The nature of bank deposits binds FEBTC to its contract of loan with Grace, and there was no legal justification for the bank to refuse payment, notwithstanding the claim of the spouses Serfino.

  2. FEBTC is not bound by the compromise judgment. The court held that FEBTC's obligation is governed by its contract of loan with Grace as the depositor, and not by the compromise judgment between the spouses Serfino and the spouses Cortez.

  3. FEBTC is not obligated to return the deposit to the spouses Serfino upon demand. The court applied the provisions of the Civil Code on loan, stating that FEBTC is not obliged to return the deposit if it was notified of a third party's adverse claim.

PRINCIPLES: