Far East Bank and Trust Co v Queremit

G.R. No. 148582

January 16, 2002

Facts:

Respondent Estrella Querimit opened a dollar savings account in FEBTC for which she was issued 4 Certificates of Deposit. In 1989, respondent accompanied her husband to the US for medical treatment. In 1993, her husband died and Estrella Querimit returned to the Philippines. She went to petitioner FEBTC to withdraw her deposit but she was told that her husband had withdrawn the money in deposit. Respondent demanded payment including interests earned. Respondent filed a complaint upon refusal of petitioner to pay. 

The trial court rendered its judgment in favor of respondent. Petitioner appealed but the CA affirmed the trial court’s decision. It ruled that FEBTC failed to prove that the certificates of deposit had been paid out of its funds. 

Issue:

Whether or not petitioner bank is liable in paying the certificates of deposit without the production of such certificates. 

Held:

Yes. A certificate of deposit is defined as a written acknowledgement by a bank or banker of the receipt of a sum of money on deposit which the bank or banker promises to pay to the depositor, to the order of the depositor, or to some other person or his order, whereby the relation of debtor and creditor between the bank and the depositor is created. The principle that payment, in order to discharge a debt, must be made to someone authorized to receive it is applicable to the payment of certificates of deposit. 

In this case, the certificates of deposit were clearly marked payable to “bearer”, which means – to the “person in possession of an instrument, document of title or security payable to bearer or indorsed in blank”. Petitioner should not have paid respondent’s husband or any third party without requiring the surrender of the certificates of deposit. The subject certificates of deposit until now remain unendorsed, undelivered and unwithdrawn by respondent Estrella Querimit. 

Petitioner FEBTC thus failed to exercise that degree of diligence required by the nature of its business.