Withholding of bank deposit | The Manila Times

Dear PAO,

I have been a loyal client of a certain bank for the last 10 years. Apparently, when my name was involved in an alleged scam with the bank, it initiated a case against me for estafa. The bank also refused to release my bank deposit, claiming that it was withholding the same pursuant to a “Hold Out” clause in our agreement, which reserved its right to keep my deposit in the event that I incur a liability to them. Do banks have the right to withhold deposits against their depositors when a criminal case is filed against them?

Miranda

Dear Miranda,

Please be informed of the Supreme Court’s ruling in the case of The Metropolitan Bank and Trust Company v. Ana Grace Rosales and Yo Yuk To, GR 183204, Jan. 13, 2014, penned by Associate Justice Mariano del Castillo, where it was held that:

“The ‘Hold Out’ clause applies only if there is a valid and existing obligation arising from any of the sources of obligation enumerated in Article 1157 of the Civil Code, to wit: law, contracts, quasi-contracts, delict, and quasi-delict. In this case, petitioner failed to show that respondents have an obligation to it under any law, contract, quasi-contract, delict, or quasi-delict. And although a criminal case was filed by petitioner against respondent Rosales, this is not enough reason for petitioner to issue a ‘Hold Out’ order as the case is still pending and no final judgment of conviction has been rendered against respondent Rosales. In fact, it is significant to note that at the time petitioner issued the ‘Hold Out’ order, the criminal complaint had not yet been filed. Thus, considering that respondent Rosales is not liable under any of the five sources of obligation, there was no legal basis for petitioner to issue the ‘Hold Out’ order. Accordingly, we agree with the findings of the RTC and the CA that the ‘Hold Out’ clause does not apply in the instant case.

“In view of the foregoing, we find that petitioner is guilty of breach of contract when it unjustifiably refused to release respondents’ deposit despite demand. Having breached its contract with respondents, petitioner is liable for damages.” (Emphasis supplied)

As provided in the afore-mentioned jurisprudence, banks may only withhold deposits from their depositors when the latter becomes liable to them under any of the five sources of obligation enumerated in Article 1157 of the New Civil Code, which are law, contracts, quasi-contracts, delict, and quasi-delict.

Similar to your given case, the jurisprudence above held that even if a criminal case was filed by the bank against its depositor, the same cannot be used to justify the bank withholding the deposit made by its depositor, as the criminal case is still pending and no final judgment of conviction has been rendered against its depositor. There is no source of obligation yet, and hence, there is no legal basis for the bank to withhold deposits. Consequently, the bank may be held liable for breach of contract when it unjustifiably refuses to release your deposit despite demand.

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated on.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]