Miranda v.

PDIC
(Tort Liability of Monetary Board Members, September 8, 2006, YNARES-SANTIAGO, J.)

SUMMARY: Miranda was a depositor of Prime Savings Bank (PSB). She withdrew from her
account, but got 2 crossed cashier's P5,502,000 instead of cash. She deposited the cashier's
check in another bank on the same day, but the BSP suspended the clearing priveleges of PSB
and the checks were returned unpaid. A day after, PSB declared a bank and later on PSB was
put under receivership of PDIC. Miranda filed a civil action for a sum of money against BSP,
PSB, & PDIC. The RTC ruled for her. The CA reversed and dismissed the case. The SC ruled
that cashier's checks did not result in an assignment of the cash. The cashier's checks are
counted as a Disputed claim and the creditor-debtor relationship between Miranda and PSB
remained thus she needs to file her claim with the proper liquidation court. [Topic] The BSP
cannot be held liable as they had acted within their powers to enforce sanctions against PSB
which caused injuries. But the SC held that there was Bad Faith on the part of PSB by issuing
cashier's checks when they knew they were insolvent. Thus the cashier's checks will be given
preference in the liquidation proceedings.

FACTS:
1. Petitioner Leticia G. Miranda was a depositor of Prime Savings Bank, Santiago City Branch.
On June 3, 1999, she withdrew substantial amounts from her account, but instead of cash
she opted to be issued a crossed cashier's check. She was thus issued two cashier's checks
in the sum of P2,500,000 and P3,002,000. Petitioner deposited the two checks into her
account in another bank on the same day, however, Bangko Sentral ng Pilipinas (BSP)
suspended the clearing privileges of Prime Savings Bank effective 2:00 p.m. of June 3,
1999. The two checks of petitioner were returned to her unpaid. On June 4, 1999, Prime
Savings Bank declared a bank holiday. On January 7, 2000, the BSP placed Prime Savings
Bank under the receivership of the Philippine Deposit Insurance Corporation (PDIC).

2. Petitioner filed a civil action for sum of money in the Regional Trial Court of Santiago City,
Isabela to recover the funds from her unpaid checks against Prime Savings Bank, PDIC and
the BSP. The RTC ordered PDIC, BSP, & PSB to pay jointly and solidarily the amount of
P5,502,000. The Court of Appeals reversed the trial court and ruled in favor of the PDIC and
BSP, dismissing the case against them, without prejudice to the right of petitioner to file her
claim before the court designated to adjudicate on claims against Prime Savings Bank.

3. Petitioner contends that she ceased to be a depositor upon withdrawal of her deposit and
the issuance of the two cashier's checks to her. As a holder in due course she is an
assignee of the funds of Prime Savings Bank as drawer thereof and entitled to its immediate
payment. Petitioner next argues that the present claim is not a disputed claim because she
is recovering assigned funds which were segregated. She argues that the mere issuance of
the cashier's check, the funds represented by the check are transferred from the credit of
the maker to that of the payee or holder thus she cannot be placed on the same footing with
the ordinary creditors of the bank. She avers that she is not a creditor thus is entitled to the
immediate payment of her claim. She argues that PDIC and BSP contrary to the Negotiable
Instruments Law have caused damage to the petitioner and should be held solidarily liable.

4. Respondents, on the other hand, state that the mere issuance of the cashier's checks did
not operate as assignment of funds in favor of the petitioner. PSB was also already cash-
strapped and they argue that there can be no assignment of funds when there is no funds to
speak of in the first place. The BSP & PDIC argue that they cannot be held liable as they
were not parties to the checks.
RATIO:
1. WON the claim is a preferred claim – YES
 In the absence of fraud, the purchase of a cashier's check, is not entitled to a preference
over general creditors. However, in a situation involving the element of fraud, where a
cashier's check is purchased from a bank at a time when it is insolvent, as its officers
know or are bound to know by the exercise of reasonable diligence, it has been held that
the purchase is entitled to a preference in the assets of the bank on its liquidation before
the check is paid. Clearly, there was fraud or the intent to deceive in this case. PSB did
not collapse overnight and they were cash-strapped, a fact which could not have gone
unnoticed by the bank officers. They could not have issued in good faith checks knowing
that the bank's coffers could not meet this.