BPI VS.

INTERMEDIATE APPELLATE COURT

GR L-66826, August 19, 1988

keeping it and returning the same. A deposit may be

constituted even without any consideration. It is not
necessary that the depositary receives a fee before it
becomes obligated to keep the item entrusted for
safekeeping and to return it later to the depositor.
Petitioner cannot evade liability by arguing that
neither a contract of deposit nor that of insurance,
guaranty or surety for the loss of the car was
constituted when De Asis availed of its free valet
parking service.

FACTS: Rizaldy T. Zshornack and his wife maintained

in COMTRUST a dollar savings account and a peso
current account. An application for a dollar drat was
accomplished by Virgillo Garcia branch manager of
COMTRUST payable to a certain Leovigilda Dizon. In
the PPLICtion, Garcia indicated that the amount was
to be charged to the dollar savings account of the
Zshornacks. There wasa no indication of the name of
the purchaser of the dollar draft. Comtrust issued a
check payable to the order of Dizon. When Zshornack
noticed the withdrawal from his account, he
demanded an explainaiton from the bank. In its
answer, Comtrust claimed that the peso value of the
withdrawal was given to Atty. Ernesto Zshornack,
brother of Rizaldy. When he encashed with
COMTRUST a cashiers check for P8450 issued by the
manila banking corporation payable to Ernesto.

SUPERLINES TRANSPORTATION COMPANY, INC.

vs. PHILIPPINE NATIONAL CONSTRUCTION
COMPANY and PEDRO BALUBAL
G.R. No. 169596, March 28, 2007
FACTS:
Superlines
Transportation
Company
(Superlines) is engaged in the business of providing
public transportation. On 13 December 1990, one of
its buses swerved and crashed into the radio room of
respondent Philippine National Construction Company
(PNCC).

ISSUE: Whether the contract between petitioner and

respondent bank is a deposit?
HELD: The document which embodies the contract
states that the US$3,000.00 was received by the
bank for safekeeping. The subsequent acts of the
parties also show that the intent of the parties was
really for the bank to safely keep the dollars and to
return it to Zshornack at a later time. Thus,
Zshornack demanded the return of the money on May
10, 1976, or over five months later.

The incident was initially investigated by PNCCs toll

way patrol, Sofronio Salvanera, and Pedro Balubal,
then head of traffic control and security department
of the South Luzon tollway. The bus was then towed
by the PNCC patrol upon request of traffic
investigator Cesar Lopera.
Superlines made several requests for PNCC to release
the bus, but Balubal denied the same, despite
Superlines undertaking to repair the damaged radio
room. Superlines thus filed a complaint for recovery
of personal property with damages against PNCC and
Balubal. The claim for damages, however, failed to
implead Lopera and any other police officer
responsible for the seizure and distraint of the bus as
indispensable parties.

The above arrangement is that contract defined

under Article 1962, New Civil Code, which reads:
Art. 1962. A deposit is constituted from the moment a
person receives a thing belonging to another, with
the obligation of safely keeping it and of returning the
same. If the safekeeping of the thing delivered is not
the principal purpose of the contract, there is no
deposit but some other contract.

ISSUES:
1. Whether or not Superlines claim for damages
against can be passed upon.
2. Whether or not Superlines failure to implead
indispensable parties is fatal to its cause of
action.

TRIPLE-V FOOD SERVICES INC. vs. FILIPINO

MERCHANTS INSURANCE COMPANY
GR. No. 160554, February 21, 2005
FACTS: Mary Jo-Anne De Asis dined at petitioner's
Kamayan Restaurant. De Asis was using a Mitsubishi
Galant Super Saloon Model 1995 issued by her
employer Crispa Textile Inc. On said date, De Asis
availed of the valet parking service of petitioner and
entrusted her car key to petitioner's valet counter.
Afterwards, a certain Madridano, valet attendant,
noticed that the car was not in its parking slot and its
key no longer in the box where valet attendants
usually keep the keys of cars entrusted to them. The
car was never recovered. Thereafter, Crispa filed a
claim against its insurer, herein respondent Filipino
Merchants
Insurance
Company,
Inc.
Having
indemnified Crispa for the loss of the subject vehicle,
FMICI, as subrogee to Crispa's rights, filed with the
RTC at Makati City an action for damages against
petitioner Triple-V Food Services, Inc. Petitioner
claimed that the complaint failed to adduce facts to
support the allegations of recklessness and
negligence committed in the safekeeping and
custody of the subject vehicle. Besides, when De Asis
availed the free parking stab which contained a
waiver of petitioners liability in case of loss, she had
thereby waived her rights.

RULING: Anent the first issue, the Supreme Court

ruled in the negative. The reason is that a contract of
deposit was perfected between the police authorities,
through Lopera, and PNCC, the former having turned
over the bus to PNCC for safekeeping. Hence, for
Superlines to pursue its claim for damages, it or the
trial court motu proprio must implead as defendants
the indispensable parties.
With respect to the second issue, the Court ruled,
again, in the negative. Accordingly, the failure of
Superlines to implead indispensable parties is not
fatal to its cause of action, since misjoinder or nonjoinder of parties is not a ground for its dismissal. In
other words, the non-joinder of indispensable parties
is not a ground for the dismissal of an action.
According to Section 11, Rule 3 of the Rules of Court,
parties may be added by order of the court on motion
of the party or on its own initiative at any stage of the
action and/or such times as are just. If the petitioner
refuses to implead an indispensable party despite the
order of the court, the latter may dismiss the petition
for its failure to comply therefor. The remedy is to
implead the non-party claimed to be indispensable.

ISSUE: Whether or not petitioner Triple-V Food

Services, Inc. is liable for the loss.

CALIBO VS. CA
GR 120528

HELD: The Supreme Court ruled in the affirmative. In

a contract of deposit, a person receives an object
belonging to another with the obligation of safely

FACTS: Mike Abuella, private respondents son

leased the house of Calibo for residential purposes.
Pablo Abuella left the tractor with his son for
safekeeping. Rent and other expenses were initially
paid but subsequently defaulted in payment thereof.
When confronted by Calibo, Mike Abuella manifested
that hell only stay in the house until end of the year
1986 and offered the tractor as security. In order for
him to pay his obligations sooner, he asked Calibo to
help him look for buyers. In January 1987, a new
tenant occupied the house and Calibo moved the
tractor to his fathers garage also in the same city.
Even after demands, Mike failed to pay his arrears; he
only assured Calibo that the tractor would stand as
guarantee to his payment. When Pablo Abuella tried
to get the tractor from Calibo, he tried to negotiate
with him and offered to write a check in payment of
the rentals and postdated checks to cover the other
expenses but still had to verify with Mike. Calibo
would only accept the latter if Pablo would execute a
promissory note in his favor to cover the remaining
expenses. The two did not agree. Pablo Abuella
instituted an action for replevin, claiming ownership
of the tractor and seeking to recover possession
thereof from petitioner.

When this document was delivered 12,000 pesos in

silver were worth more than 12,000 pesos in gold.
The plaintiff delivered it to the defendants in
consideration of the execution of the document
12,000 in gold. The defendants remitted the interest
to him every three months at the rate of 8 % per
annum until January 30, 1888, when they notified him
that thereafter the interest would be6 per cent. The
plaintiff accepted this reduction and the interest at
that rate were remitted to him by the defendants
until February 10, 1904. The plaintiff received this
payments in silver without any protest whatever until
the 10th day of February, 1904.Subsequently, in a
letter, he called the attention of the defendants about
the new American law in force in the Philippines
regarding the gold standard had been introduced and
that by reason thereof he was entitled to receive his
interest in gold, and in view of the fact that when he
delivered the money to the defendants in 1876 he
delivered it in gold coin.
The plaintiff claimed that, having paid to the
defendants 12,000 pesos in gold coin, he is now
entitled to receive from them the value of 12,000
pesos in gold coin; that is to say, 24,000 pesos in
silver. The trial court held that he was entitled to
recover only 12,000 pesos, and the defendants
having deposited that amount the trial court rendered
judgment in favor of the respondents. Then, the
petitioner appealed the trial courts judgment.

Both the trial court and the CA ruled in favor of

Abuella. Mike Abuella could not have validly pledged
the subject tractor to petitioner since he was not the
owner thereof, nor was he authorized by its owner to
pledge the tractor.

ISSUE: Whether or not the document is evidence of

an ordinary loan or an irregular deposit.

ISSUE: WON there was an implied principal-agent

relationship between Pablo and Mike.

HELD: It is an ordinary loan.

HELD: No. Pablo Abuella categorically stated that the
tractor was only left to Mike for safekeeping; not to
be pledged or alienated. Mike acted without authority
or consent from Pablo. Article 1869 states that there
would only be implied agency is the person is acting
within the authority granted to him by the principal.
Article 1911 mandates that the principal is solidarily
liable with the agent if the former allowed the latter
to act as though he had full powers. Again, in view of
Pablos lack of knowledge of Mikes pledging the
tractor without any authority from him, it shows that
Pablo could not have allowed the Mike to pledge the
tractor as if he had full powers to do so. Petition
denied. CA decision affirmed.

Manresa, in his Commentaries on the Civil Code (vol.

11, p. 664), states that there are three points of
difference between a loan and an irregular deposit.
The first difference which he points out consists in the
fact that in an irregular deposit the only benefit is
that which accrues to the depositor, while in loan the
essential cause for the transaction is the necessity of
the borrower. The contract in question does not fulfill
this requirement of an irregular deposit. It is very
apparent that is was not for the sole benefit of
Rogers. It like any other loan of money was for the
benefit of both parties. The benefit which Smith, Bell
& Co. received was the use of the money; the benefit
which Rogers received was the interest of his money.
In the letter which Smith, Bell & Co. on the 30th of
June, 1888, notified the plaintiff of the reduction of
the interest, they said: "We call your attention to this
matter in order that you may if you think best employ
your money in some other place."

ROGERS vs. SMITH, BELL & CO.

G.R No. L-4347; March 9, 1908
FACTS: Respondents executed document No. 1418,
which is the subject of this case. The said document
was delivered to the petitioner. The document
contained the following details:

Nor does the contract in question fulfill the third

requisite indicated by Manresa, which is, in an
irregular deposit, the depositor can demand the
return of the article at any time, while a lender is
bound by the provisions of the contract and cannot
seek restitution until the time for payment, as
provided in the contract, has arisen. It is apparent
from the terms of this document that the plaintiff
could not demand his money at any time. He was
bound to give notice of his desire for its return and
then to wait for six months before he could insist
upon payment.

No. 1418. $12,000.

The sum of pesos twelve thousand has been
deposited with us, received from Jose Rogers,
which sum we will pay on the last day of the
six months after the presentation of this
document, to the order of Mr. Jose Rogers.
Manila, February 17, 1876.
SMITH, BELL & CO.

The second difference which exists, according to

Manresa, between an irregular deposit and a loan lies
in the fact that in an irregular deposit the depositor
has a preference over other creditors in the
distribution of the debtor's property. It is apparent,
therefore, that this document does not state those
requisites which are essential to an irregular deposit.

The said sum of twelve thousand pesos shall

bear interest at the rate of eight per centum
(8%) per annum from this date, February 17,
1876.
SMITH, BELL & CO.

It seems clear from these citations that the document

in question is evidence of an ordinary loan and
created between the plaintiff and defendants the
relation of debtor and creditor. The two judgments of
the supreme court of Spain cited by the appellant in
his brief have no bearing upon the question. In that of
the 9th of July, 1889, it appeared that the Bank of
Havana returned to the plaintiff the same kind of
money which it had received from him. The other
judgment, of the 7th of February, 1891, simply held
that a servant who had left her money with her
master and had taken a written obligation from him
to pay the same was not, in the distribution of his
property, entitled to preference over other creditors
on the ground that her debt was for personal labor.
G.R. No. L-32778

MARIANO VELASCO & CO.

By (Sgd.) JOSE VELASCO
Manager.
P10,000.00.
In his testimony, Jose Velasco stated that his
signature on the receipt was authentic and that he
received the said sum of P10,000 from the appellee
and deposited it with the bank in the current account
of Mariano Velasco & Co.
In our opinion the court below erred in finding that
the claim of the appellee should be considered a
deposit and a preferred claim. In the case of Gavieres
vs. De Tavera (1 Phil., 17), very similar to the present
case, this court held that the transaction therein
involved was a loan and not a deposit. The facts of
the case were that in 1859 Ignacia de Gorricho
delivered P3,000 to Felix Pardo de Tavera. The
agreement
between
them
read
as
follows
(translation):

November 14, 1930

Involuntary insolvency of Mariano Velasco and

Co., et al. COMPAIA AGRICOLA DE
ULTRAMAR,claimant-appellee,
vs.
VICENTE NEPOMUCENO, assignee-appellant.
The appellant in his own behalf.
Eusebio Orense and Nicolas Belmonte for appellee.

Received of Seorita Ignacia de Gorricho the

sum of 3,000 pesos, gold (3,000 pesos), as a
deposit payable on two months' notice in
advance, with interest at 6 percent per
annum with a hypothecation of the goods
now owned by me or which may be owned
hereafter, as security of the payment.

OSTRAND, J.:
It appears from the record that on March 17, 1927,
the registered partnerships, Mariano Velasco & Co.,
Mariano Velasco, Sons, & Co., and Mariano Velasco &
Co., Inc., were, on petition of the creditors, declared
insolvent by the Court of First Instance of Manila.

In witness whereof I sign in Binondo, January

31, 1859.

On the 16th day of April, 1927, the Compania

Agricola de Ultramar filed a claim against one of the
insolvents Mariano Velasco & Co., claiming the sum of
P10,000, with the agreed interest thereon at the rate
of 6 per cent per annum from April 5, 1918, until its
full payment was a deposit with said Mariano Velasco
& Co. and asked the court to declare it a preferred
claim.

FELIX PARDO DE TAVERA

After the death of both parties, Gavieres, as plaintiff
and successor in interest of the deceased Ignacia de
Gorricho, brought the action against Trinidad H. Pardo
de Tavera, the successor in interest of the deceased
Felix Pardo de Tavera, for the collection of the sum of
P1,423.75, the remaining portion of the 3,000 pesos.
The plaintiff Gavieres alleged that the money was
delivered to Felix Pardo de Tavera as a deposit, but
the defendant insisted that the agreement above
quoted was not a contract of deposit but one of loan.
This court said:

The assignee of the insolvency answered the claim by

interposing a general denial. The claim was
thereupon referred by the court to a Commissioner to
receive the evidence, and on September 23, 1929,
the court rendered a decision declaring that the
alleged deposit was a preferred claim for the sum
mentioned, with interest at 6 per cent per annum
from April 5, 1918, until paid. From this decision the
assignee appealed.

Although in the document in question a

deposit is spoken of, nevertheless from an
examination of the entire document it clearly
appears that the contract was a loan and that
such was the intention of the parties. It is
unnecessary to recur to the cannons of
interpretation to arrive at this conclusion. The
obligation of the depository to pay interest at
the rate of 6 per cent to the depositor suffices
to cause the obligation to be considered as a
loan and makes it likewise evident that it was
the intention of the parties that the
depository should have the right to make use
of the amount deposited, since it was
stipulated that the amount could be collected
after notice of two months in advance. Such
being the case, the contract lost the
character of a deposit and acquired that of a
loan. (Art. 1768, Civil Code.)

The evidence presented by the claimant Compania

Agricola de Ultramar consisted of a receipt in writing,
and the testimony of Jose Velasco who was manager
of Mariano Velasco & Co. at the time the note was
executed. The receipt reads as follow (translation):
MANILA, P. I., April 5, 1918.
Received from the "Compania Agricola de
Ultramar" the sum of ten thousand Philippine
pesos as a deposit at the interest of six per
cent annually, for the term of three months
from date.
In witness thereof, I sign the present.

In the case of Javellana vs. Lim (11 Phil., 141) this

court, speaking through Justice Torres said:

Authority from the court having been

previously obtained, the complaint was
amended on the 10th of January, 1907; it was
then alleged, that on the 26th of May, 1897,
the defendants executed and subscribed a
document in favor of the plaintiff reading as
follows:

to the one received by them. For this reason

it must be understood that the debtors were
lawfully authorized to make use of the
amount deposited, which they have done, as
subsequently shown when asking for an
extension of the time for the return thereof,
inasmuch as, acknowledging that they have
subjected the lender, their creditor, to losses
and damages for not complying with what
had been stipulated, and being conscious
that they had used, for their own profit and
gain, the money that they received
apparently as a deposit, they engaged to pay
interest to the creditor from the date named
until the time when the refund should be
made. Such conduct on the part of the
debtors is unquestionable evidence that the
transaction entered in to between the
interested parties was not a deposit, but a
real contract of loan.

We have received from Angel Javellana, as a

deposit without interest, the sum of two
thousand six hundred and eighty-six pesos
and fifty-eight cents of pesos fuertes, which
we will return to the said gentleman, jointly
and severally on the 20th of January, 1898.
Jaro, 26th of May 1879. Signed: JOSE LIM.
Signed: CEFERINO DOMINGO LIM.
That, when the obligation became due, the
defendants begged the plaintiff for an
extension of time for the payment thereof
binding themselves to pay interest at the rate
of 15 per cent on the amount of their
indebtedness, to which the plaintiff acceded;
that on the 15th of May, 1902, the debtors
paid on account of interest due the sum of
1,000 pesos, with the exception of which they
had not paid any other sum on account of
either capital or interest, notwithstanding the
requests made by the plaintiff, who had
thereby been subjected to loss and damages.
xxx

xxx

Article 1767 of the Civil Code provides that

"The depository cannot make use of
the thing deposited without the
express permission of the depositor."
"Otherwise he shall be liable for
losses and damages."
Article 1768 also provides that

xxx

"When the depository has permission

to make use of the thing deposited,
the contract loses the character of a
deposit and becomes a loan or
bailment."

The document of indebtedness inserted in the

complaint states that the plaintiff left on
deposit with the defendants a given sum of
money which they were jointly and severally
obliged to return on a certain date fixed in
the document; but that, nevertheless, when
the document appearing as Exhibit 2, written
in the Visayan dialect and followed by a
translation into Spanish was executed, it was
acknowledged, at the date thereof, the 15th
of November, 1902 that the amount
deposited had not yet been returned to the
creditor, whereby he was subjected to losses
and damages amounting to 830 pesos since
the 20th of January, 1898, when the return
was again stipulated with the further
agreement that the amount deposited should
bear interest at the rate of 15 per cent per
annum from the aforesaid date of January 20,
and that the 1,000 pesos paid to the
depositor on the 15th of May, 1900,
according to the receipt issued by him to the
debtors, would be included, and that the said
rate of interest would obtain until the debtors
paid the creditor the said amount in full. In
this second document the contract between
the parties, which is a real loan of money with
interest,
appears
perfectly
defined,
notwithstanding the fact that in the original
document executed by the debtors on the
26th of May, 1897, it is called a deposit; so
that when they bound themselves jointly and
severally to refund the sum of 2,686.58 pesos
to the depositor, Javellana, they did not
engage to return the same coins received and
of which the amount deposited consisted, and
they could have accomplished the return
agreed upon by the delivery of a sum equal

"The permission not be presumed,

and its existence must be proven."
xxx

xxx

xxx

Moreover, for the reasons above set forth it

may, as a matter of course, be inferred that
there was no renewal of the contract of
deposit converted into a loan, because, as
has already been stated, the defendants
received said amount by virtue of a real loan
contract under the name of a deposit, since
the
so-called
bailees
were
forthwith
authorized to dispose of the amount
deposited. This they have done, as has been
clearly shown.lawphil.net
The two cases quoted are sufficient to show that the
ten thousand pesos delivered by the appellee to
Mariano Velasco & Co. cannot de regarded as a
technical deposit. But the appellee argues that it is at
least an "irregular deposit." This argument is, we
think, sufficiently answered in the case of Rogers vs.
Smith, Bell & Co. (10 Phil., 319). There this court said:
. . . Manresa, in his Commentaries on the Civil
Code (vol. 11, p. 664), states that there are
three points of difference between a loan and
an irregular deposit. The first difference which
he points out consists in the fact that in an
irregular deposit the only benefit is that which
accrues to the depositor, while in a loan the

essential cause for the transaction is the

necessity of the borrower. The contract in
question does not fulfill this requirement of
an irregular deposit. It is very apparent that it
was not for the sole benefit of Rogers. It, like
any other loan of money, was for the benefit
of both parties. The benefit which Smith, Bell
& Co. received was the use of the money; the
benefit which Rogers received was the
interest on his money. In the letter in which
Smith, Bell & Co. on the 30th of June, 1888,
notified the plaintiff of the reduction of the
interest, they said: "We call your attention to
this matter in order that you may if you think
best employ your money in some other
place."

Petition
for mandamus and
prohibition,
with
preliminary injunction, that seeks the establishment
of joint and solidary liability to the amount of Three
Hundred Fifty Thousand Pesos, with interest, against
respondent Central Bank of the Philippines and
Overseas Bank of Manila and its stockholders, on the
alleged failure of the Overseas Bank of Manila to
return the time deposits made by petitioner and
assigned to him, on the ground that respondent
Central Bank failed in its duty to exercise strict
supervision over respondent Overseas Bank of Manila
to
protect
depositors
and
the
general
public. 1 Petitioner also prays that both respondent
banks be ordered to execute the proper and
necessary documents to constitute all properties
fisted in Annex "7" of the Answer of respondent
Central Bank of the Philippines in G.R. No. L-29352,
entitled "Emerita M. Ramos, et al vs. Central Bank of
the Philippines," into a trust fund in favor of petitioner
and all other depositors of respondent Overseas Bank
of Manila. It is also prayed that the respondents be
prohibited permanently from honoring, implementing,
or doing any act predicated upon the validity or
efficacy of the deeds of mortgage, assignment.
and/or conveyance or transfer of whatever nature of
the properties listed in Annex "7" of the Answer of
respondent Central Bank in G.R. No. 29352. 2

Nor does the contract in question fulfill the

third requisite indicated by Manresa, which is,
that in an irregular deposit, the depositor can
demand the return of the article at any time,
while a lender is bound by the provisions of
the contract and cannot seek restitution until
the time for payment, as provided in the
contract, has arisen. It is apparent from the
terms of this documents that the plaintiff
could not demand his money at any time. He
was bound to give notice of his desire for its
return and then to wait for six months before
he could insist upon payment.

A sought for ex-parte preliminary injunction against

both respondent banks was not given by this Court.
Undisputed pertinent facts are:

In the present case the transaction in question was

clearly not for the sole benefit of the Compania
Agricola de Ultramar; it was evidently for the benefit
of both parties. Neither could the alleged depositor
demand payment until the expiration of the term of
three months.

On October 13, 1966 and December 12, 1966,

petitioner made a time deposit, for one year with 6%
interest, of One Hundred Fifty Thousand Pesos
(P150,000.00) with the respondent Overseas Bank of
Manila. 3 Concepcion Maneja also made a time
deposit, for one year with 6-% interest, on March 6,
1967, of Two Hundred Thousand Pesos (P200,000.00)
with the same respondent Overseas Bank of Manila. 4

For the reasons stated, the appealed judgment is

reversed, and we hold that the transaction in
question must be regarded as a loan, without
preference. Without costs. So ordered.

On August 31, 1968, Concepcion Maneja, married

Felixberto M. Serrano, assigned and conveyed
petitioner Manuel M. Serrano, her time deposit
P200,000.00 with respondent Overseas Bank
Manila. 5

Johnson, Street, Malcolm, Villamor, Johns and VillaReal, JJ., concur.

to
to
of
of

Notwithstanding series of demands for encashment of

the aforementioned time deposits from the
respondent Overseas Bank of Manila, dating from
December 6, 1967 up to March 4, 1968, not a single
one of the time deposit certificates was honored by
respondent Overseas Bank of Manila. 6

G.R. No. L-30511 February 14, 1980

MANUEL M. SERRANO, petitioner,
vs.
CENTRAL BANK OF THE PHILIPPINES; OVERSEAS
BANK OF MANILA; EMERITO M. RAMOS, SUSANA
B. RAMOS, EMERITO B. RAMOS, JR., JOSEFA
RAMOS DELA RAMA, HORACIO DELA RAMA,
ANTONIO B. RAMOS, FILOMENA RAMOS
LEDESMA, RODOLFO LEDESMA, VICTORIA
RAMOS TANJUATCO, and TEOFILO
TANJUATCO, respondents.

Respondent Central Bank admits that it is charged

with the duty of administering the banking system of
the Republic and it exercises supervision over all
doing business in the Philippines, but denies the
petitioner's allegation that the Central Bank has the
duty to exercise a most rigid and stringent
supervision of banks, implying that respondent
Central Bank has to watch every move or activity of
all banks, including respondent Overseas Bank of
Manila. Respondent Central Bank claims that as of
March 12, 1965, the Overseas Bank of Manila, while
operating, was only on a limited degree of banking
operations since the Monetary Board decided in its
Resolution No. 322, dated March 12, 1965, to prohibit
the Overseas Bank of Manila from making new loans
and investments in view of its chronic reserve
deficiencies against its deposit liabilities. This limited
operation of respondent Overseas Bank of Manila
continued up to 1968. 7

Rene Diokno for petitioner.

F.E. Evangelista & Glecerio T. Orsolino for respondent
Central Bank of the Philippines.
Feliciano C. Tumale, Pacifico T. Torres and Antonio B.
Periquet for respondent Overseas Bank of Manila.
Josefina G. Salonga for all other respondents.
CONCEPCION, JR., J.:

Respondent Central Bank also denied that it is

guarantor of the permanent solvency of any banking
institution as claimed by petitioner. It claims that
neither the law nor sound banking supervision
requires respondent Central Bank to advertise or
represent to the public any remedial measures it may
impose upon chronic delinquent banks as such action
may inevitably result to panic or bank "runs". In the
years 1966-1967, there were no findings to declare
the respondent Overseas Bank of Manila as
insolvent. 8

Because of the above decision, petitioner in this case

filed a motion for judgment in this case, praying for a
decision on the merits, adjudging respondent Central
Bank jointly and severally liable with respondent
Overseas Bank of Manila to the petitioner for the
P350,000 time deposit made with the latter bank,
with all interests due therein; and declaring all assets
assigned or mortgaged by the respondents Overseas
Bank of Manila and the Ramos groups in favor of the
Central Bank as trust funds for the benefit of
petitioner and other depositors. 13

Respondent Central Bank likewise denied that a

constructive trust was created in favor of petitioner
and his predecessor in interest Concepcion Maneja
when their time deposits were made in 1966 and
1967 with the respondent Overseas Bank of Manila as
during that time the latter was not an insolvent bank
and its operation as a banking institution was being
salvaged by the respondent Central Bank. 9

By the very nature of the claims and causes of action

against respondents, they in reality are recovery of
time deposits plus interest from respondent Overseas
Bank of Manila, and recovery of damages against
respondent Central Bank for its alleged failure to
strictly supervise the acts of the other respondent
Bank and protect the interests of its depositors by
virtue of the constructive trust created when
respondent Central Bank required the other
respondent to increase its collaterals for its overdrafts
said emergency loans, said collaterals allegedly
acquired through the use of depositors money. These
claims shoud be ventilated in the Court of First
Instance of proper jurisdiction as We already pointed
out when this Court denied petitioner's motion to
intervene in G.R. No. L-29352. Claims of these nature
are not proper in actions for mandamus and
prohibition as there is no shown clear abuse of
discretion by the Central Bank in its exercise of
supervision over the other respondent Overseas Bank
of Manila, and if there was, petitioner here is not the
proper party to raise that question, but rather the
Overseas Bank of Manila, as it did in G.R. No. L29352. Neither is there anything to prohibit in this
case, since the questioned acts of the respondent
Central Bank (the acts of dissolving and liquidating
the Overseas Bank of Manila), which petitioner here
intends to use as his basis for claims of damages
against respondent Central Bank, had been
accomplished a long time ago.

Respondent Central Bank avers no knowledge of

petitioner's claim that the properties given by
respondent Overseas Bank of Manila as additional
collaterals to respondent Central Bank of the
Philippines for the former's overdrafts and emergency
loans were acquired through the use of depositors'
money, including that of the petitioner and
Concepcion Maneja. 10
In G.R. No. L-29362, entitled "Emerita M. Ramos, et
al. vs. Central Bank of the Philippines," a case was
filed by the petitioner Ramos, wherein respondent
Overseas Bank of Manila sought to prevent
respondent Central Bank from closing, declaring the
former insolvent, and liquidating its assets. Petitioner
Manuel Serrano in this case, filed on September 6,
1968, a motion to intervene in G.R. No. L-29352, on
the ground that Serrano had a real and legal interest
as depositor of the Overseas Bank of Manila in the
matter in litigation in that case. Respondent Central
Bank in G.R. No. L-29352 opposed petitioner Manuel
Serrano's motion to intervene in that case, on the
ground that his claim as depositor of the Overseas
Bank of Manila should properly be ventilated in the
Court of First Instance, and if this Court were to allow
Serrano to intervene as depositor in G.R. No. L-29352,
thousands of other depositors would follow and thus
cause an avalanche of cases in this Court. In the
resolution dated October 4, 1968, this Court denied
Serrano's, motion to intervene. The contents of said
motion to intervene are substantially the same as
those of the present petition. 11

Furthermore,
both
parties
overlooked
one
fundamental principle in the nature of bank deposits
when the petitioner claimed that there should be
created a constructive trust in his favor when the
respondent Overseas Bank of Manila increased its
collaterals in favor of respondent Central Bank for the
former's overdrafts and emergency loans, since these
collaterals were acquired by the use of depositors'
money.
Bank deposits are in the nature of irregular deposits.
They are really loans because they earn interest. All
kinds of bank deposits, whether fixed, savings, or
current are to be treated as loans and are to be
covered by the law on loans. 14 Current and savings
deposit are loans to a bank because it can use the
same. The petitioner here in making time deposits
that earn interests with respondent Overseas Bank of
Manila was in reality a creditor of the respondent
Bank and not a depositor. The respondent Bank was
in turn a debtor of petitioner. Failure of he respondent
Bank to honor the time deposit is failure to pay s
obligation as a debtor and not a breach of trust
arising from depositary's failure to return the subject
matter of the deposit

This Court rendered decision in G.R. No. L-29352 on

October 4, 1971, which became final and executory
on March 3, 1972, favorable to the respondent
Overseas Bank of Manila, with the dispositive portion
to wit:
WHEREFORE, the writs prayed for in
the petition are hereby granted and
respondent Central Bank's resolution
Nos. 1263, 1290 and 1333 (that
prohibit the Overseas Bank of Manila
to participate in clearing, direct the
suspension of its operation, and
ordering the liquidation of said bank)
are hereby annulled and set aside;
and said respondent Central Bank of
the Philippines is directed to comply
with its obligations under the Voting
Trust Agreement, and to desist from
taking action in violation therefor.
Costs against respondent Central
Bank of the Philippines. 12

WHEREFORE, the petition is dismissed for lack of

merit, with costs against petitioner.
SO ORDERED.
Antonio, Abad Santos, JJ., concur.

Barredo (Chairman) J., concur in the judgment on the

of the concurring opinion of Justice Aquino.
Separate Opinions
AQUINO, J., concurring:
The petitioner prayed that the Central Bank be
ordered to pay his time deposits of P350,000, plus
interests, which he could not recover from the
distressed Overseas Bank of Manila, and to declare all
the assets assigned or mortgaged by that bank and
the Ramos group to the Central Bank as trust
properties for the benefit of the petitioner and other
depositors.
G.R. No. 159794
The petitioner has no causes of action agianst the
Central Bank to obtain those reliefs. They cannot be
granted in petitioner's instant original actions in this
Court for mandamus and prohibition. It is not the
Central Bank's ministerial duty to pay petitioner's
time deposits or to hold the mortgaged properties in
trust for the depositors of the Overseas Bank of
Manila. The petitioner has no cause of action for
prohibition, a remedy usually available against any
tribunal, board, corporation or person exercising
judicial or ministerial functions.

December 19, 2006

MACLARING M. LUCMAN, in his capacity as the

Manager of the LAND BANK OF THE
PHILIPPINES, Marawi City, petitioner,
vs.
ALIMATAR MALAWI, ABDUL-KHAYER PANGCOGA,
SALIMATAR SARIP, LOMALA CADAR, ALIRIBA S.
MACARAMBON and ABDUL USMAN, respondents.
DECISION
TINGA, J.:

Since the Overseas Bank of Manila was found to be

insolvent and the Superintendent of Banks was
ordered to take over its assets preparatory to its
liquidation under section 29 of Republic Act No. 265
(p. 197, Rollo, Manifestation of September 19, 1973),
petitioner's remedy is to file his claim in the
liquidating proceeding (Central Bank vs. Morfe, L38427, March 12, 1975, 63 SCRA 114; Hernandez vs.
Rural Bank of Lucena, Inc., L-29791, January 10,
1978, 81 SCRA 75).

This is a petition for review challenging the decision

of the trial court, affirmed by the Court of Appeals,
granting the petition for mandamus filed by herein
respondents, Barangay Chairmen (or Punong
Barangay) of several barangays in the province of
Lanao del Sur.
The petition for mandamus filed by respondents
before the trial court is rooted in their claim that they
were deprived of their Internal Revenue Allotment
(IRA) for the 2nd and 3rd quarters of 1997.
Respondents further alleged that these same funds
were released by petitioner as Manager of Land Bank
of the Philippines (LBP), the depositary bank, to third
persons.

Separate Opinions
AQUINO, J., concurring:
The petitioner prayed that the Central Bank be
ordered to pay his time deposits of P350,000, plus
interests, which he could not recover from the
distressed Overseas Bank of Manila, and to declare all
the assets assigned or mortgaged by that bank and
the Ramos group to the Central Bank as trust
properties for the benefit of the petitioner and other
depositors.

There were originally six (6) petitioners when the

Petition for Mandamus with Prayer for Writ of
Preliminary Mandatory Injunction was filed by now
respondents before the court of origin. They were
Alimatar Malawi, Abdulkhayr Pangcoga, Salimatar
Sarip, Lomala Cadar, Aliriba S. Macarambon and
Abdul Usman who were the incumbent barangay
chairmen of Bubong Ngingir (Kabasaran), Ilian,
Linindingan, Mapantao-Ingod, Paigoay and Rangiran,
respectively, all from the Municipality of Pagayawan,
Lanao del Sur.1 All of them were the incumbent
barangay chairmen of their respective barangays
prior to the 12 May 1997 barangay elections. The
elections on 12 May 1997 in the aforesaid barangays
resulted in a failure of elections. Thereafter, the
special elections held in these barangays likewise
resulted in a failure of elections. 2 Consequently,
respondents remained in office in a holdover capacity
pursuant to the provisions of Sec. 1 of

The petitioner has no causes of action agianst the

Central Bank to obtain those reliefs. They cannot be
granted in petitioner's instant original actions in this
Court for mandamus and prohibition. It is not the
Central Bank's ministerial duty to pay petitioner's
time deposits or to hold the mortgaged properties in
trust for the depositors of the Overseas Bank of
Manila. The petitioner has no cause of action for
prohibition, a remedy usually available against any
tribunal, board, corporation or person exercising
judicial or ministerial functions.
Since the Overseas Bank of Manila was found to be
insolvent and the Superintendent of Banks was
ordered to take over its assets preparatory to its
liquidation under section 29 of Republic Act No. 265
(p. 197, Rollo, Manifestation of September 19, 1973),
petitioner's remedy is to file his claim in the
liquidating proceeding (Central Bank vs. Morfe, L38427, March 12, 1975, 63 SCRA 114; Hernandez vs.
Rural Bank of Lucena, Inc., L-29791, January 10,
1978, 81 SCRA 75).

R.A. No. 66793 and Comelec Resolution No. 2888

dated February 5, 1997.4
Beginning with the second quarter of 1997, LBP was
selected as the government depository bank for the
IRAs of the abovementioned barangays. 5 Being a new
government depositary bank for the IRA funds, the
authorized public officials had to open new accounts

in behalf of their government units with the proper

LBP branch from which they could withdraw the IRAs. 6

After failing again to appear on the given time for him

to adduce evidence, another Order was issued
wherein petitioner was deemed to have waived his
right to present evidence. The Order was lifted on
petitioner's Motion for Reconsideration. Instead of
presenting evidence, petitioner filed on 10 November
1999 a Motion to Dispense or Waive Presentation of
Evidence wherein he represented that the prayers in
the complaint had already been complied with. 19 The
RTC granted petitioner's motion through an
Order dated 24 September 1999.20

After the failed 12 May 1997 elections, respondents

attempted to open their respective barangays' IRA
bank accounts but were refused by petitioner
because respondents needed to show their individual
certifications showing their right to continue serving
as Barangay Chairmen and the requisite Municipal
Accountant's Advice giving respondents the authority
to withdraw IRA deposits.7 The requirement for the
Accountant's Advice stemmed from Commission on
Audit Circular No. 94-004.8

Thereafter, the RTC rendered a Decision21 dated 8

October 1999 commanding petitioner to pay
respondents, except respondent Alimatar Malawi who
failed to testify, the IRAs of their respective
barangays
"even
without
the
Accountant's
Advice."22 The dispositive portion of the Decision
reads, to wit:

Respondents were eventually allowed to open

accounts for their barangays except for Lomala Cadar
and Abdul Usman of barangays Mapantao-Ingud and
Rangiran, respectively, because the accounts for
these barangays were previously opened by two
persons who presented themselves as the duly
proclaimed Barangay Chairmen for these same
barangays.9

WHEREFORE, premises all considered, the

instant
petition
is
hereby
granted.
Accordingly, Mr. Maclaring M. Lucman,
Manager of the Land Bank of the Philippines,
Marawi City branch, is hereby ordered to pay
the following:23

In any event, all respondents were not allowed to

withdraw the IRA funds from the opened accounts,
owing to the absence of the requisite Accountant's
Advice.10

1. Aliriba Macarambon, the

2nd Quarter IRA of Paigoay,
Pagayawan in the sum of P48,200.00;

Then on 4 August 1997, five (5) other persons

presented themselves before petitioner as the newly
proclaimed Punong Barangays of the five barangays
concerned,11 each of them presenting a certification
of his election as Punong Barangay issued by the
provincial director of the DILG-ARMM and another
Certification issued by the Local Government
Operations Officer attesting, among others, to the
revocation of the certification previously issued to
respondents.12 Without verifying the authenticity of
the certifications presented by these third persons,
petitioner proceeded to release the IRA funds for the
2nd and 3rd quarters of 1997 to them.13

2. Salimatar Sarip of Linindingan the

2nd Quarter IRA - - P54,220.00
3rd Quarter IRA - - P54,220.00
3. Lomala S. Cadar of Mapantao the

Respondents thus filed on 11 August 1997 a special

civil action for Mandamus with Application for
Preliminary Mandatory Injunction docketed as Civil
Case No. 11-106, to compel petitioner to allow them
to open and maintain deposit accounts covering the
IRAs of their respective barangays and to withdraw
therefrom.14 The case was raffled to the Regional Trial
Court (RTC) of Lanao del Sur, Branch 11.15

2nd Quarter IRA - - P54,320.00

3rd Quarter IRA - - P54,320.00
4. Abdulkhay Pangcoga of Ilian the
2nd Quarter IRA - - - P53,
361.00

At the trial respondents Sarip, Cadar, Pangcoga and

Usman testified that they were duly elected
chairpersons of their respective barangays and
continued as such in a holdover capacity until their
re-election on 30 August 1997. They testified further
that
despite
presenting
the
corresponding
documents, petitioner refused to allow the withdrawal
of the funds.16

3rd Quarter IRA - - P53,361.00

5. Abdul Usman of Rangiran the
2nd Quarter IRA - - P51,185.00

Respondent Macarambon testified that he was the

incumbent chairperson of Barangay Paigoay prior to
the 12 May 1997 elections and that due to the failure
of elections, he continued to occupy his position in a
holdover capacity until he was succeeded by his wife
upon the latter's election to the same post. He
testified on petitioner's refusal to release the money
to him despite his submission of the Accountant's
Advice.17

3rd Quarter IRA - - P51,185.00

even without the Accountant's Advice and the
subsequent IRAs until their term of office shall
have expired.

For failure to appear at the scheduled hearing on 20

April 1999, petitioner was held as in default and
respondents were allowed to present evidence ex
parte. Petitioner's Motion for Reconsideration of the
Order declaring him as in default was granted. 18

SO ORDERED.24
The RTC gave no credence to petitioner's assertion of
payment to the rightful barangay officers, there
having been no testimonial or documentary evidence

proferred in substantiation thereof.25 It considered

petitioner's refusal to present evidence as a "silence"
that equates to an admission of respondents'
allegations.26Furthermore, the RTC relied on the
testimonies
and
certifications
adduced
by
respondents in holding that they were occupying their
positions in a holdover capacity27and that by virtue
thereof, they had "the perfect right to continue
performing the duties and functions of their positions
including the withdrawal of funds of their respective
barangays."28

by the provisions concerning simple loan. 33 In other

words, the barangays are the lenders while the bank
is the borrower.
This Court elucidated on the matter in Guingona, Jr.,
et al. v. The City Fiscal of Manila, et
al.,34 citing Serrano
v.
Central
Bank
of
the
Philippines,35 thus:
Bank deposits are in the nature of irregular
deposits. They are really loans because they
earn interest. All kinds of bank deposits,
whether fixed, savings, or current are to
be treated as loans and are to be
covered by the law on loans (Art. 1980,
Civil Code; Gullas v. Phil. National Bank, 62
Phil. 519). Current and savings deposits are
loans to a bank because it can use the same.
The petitioner here in making time deposits
that earn interest with respondent Overseas
Bank of Manila was in reality a creditor of the
respondent Bank and not a depositor. The
respondent Bank was in turn a debtor of
petitioner. Failure of the respondent Bank
to honor the time deposit is failure to
pay its obligation as a debtor and not a
breach of trust arising from a depository's
failure to return the subject matter of the
deposit. (Emphasis supplied.)36

The Court of Appeals29 affirmed the RTC's Decision in

toto. Hence, this petition.
Petitioner argues that respondents have no cause of
action against him since they failed to present valid
certifications showing their respective right to
continue serving as Punong Barangay as well as the
requisite Municipal Accountant's Advice. Petitioner
also asserts that the LBP Marawi Branch had already
released the contested IRAs to the Barangay
Treasurers who were acting in conjunction with the
duly recognized Punong Barangays, thereby making
the
petition
for
mandamus
moot
and
academic.30 These are factual issues that are
generally beyond the review of this Court.
Petitioner adds that respondents have no legal
personality to institute the petition for mandamus in
their own names since the IRAs rightfully belong to
the respective barangays and not to them and that
their respective barangays already received the
claimed IRAs in this instant case. 31

The relationship being contractual in nature,

mandamus is therefore not an available remedy since
mandamus does not lie to enforce the performance of
contractual obligations.37

For the proper adjudication of the present petition,

two related core issues have to be resolved. First,
what is the cause of action alleged in the initiatory
pleading filed by respondents before the trial court?
Second, are there indispensable parties which were
not impleaded?

This brings us to the second core issue.

The IRA funds for which the bank accounts were
created belong to the barangays headed by
respondents. The barangays are the only lawful
recipients of these funds. Consequently, any
transaction or claim involving these funds can be
done only through the proper authorization from the
barangays as juridical entities.

Although the pleading filed before the lower court

was denominated as a Petition for Mandamus With
Prayer For Writ of Preliminary Injunction, the
allegations thereof indicate that it is an action for
specific
performance,
particularly
to
compel
petitioner to allow withdrawal of funds from the
accounts of the barangays headed by respondents
with the LBP, Marawi Branch. Thus, the Petition
alleged:

The determination, therefore, of whether or not the

IRA funds were unlawfully withheld or improperly
released to third persons can only be determined if
the barangays participated as parties to this action.
These questions cannot be resolved with finality
without the involvement of the barangays. After all,
these controversies involve funds rightfully belonging
to the barangays. Hence, the barangays are
indispensable parties in this case.

"12. Despite the opening of deposit accounts

for the barangays mentioned in the preceding
paragraph, respondent, without any valid or
lawful cause, failed and refused, and still fails
and refuses, to allow the withdrawal of the
funds or IRA of the said barangays as
evidenced by the WITHDRAWAL CHECKS
(attached as Annexes "D" to "D-3" hereof) of
said barangays which were refused payment
when presented to the Land Bank on August
4, 1997."32

An indispensable party is defined as parties-ininterest without whom there can be no final

determination of an action. 38 The nature of an
indispensable party was thoroughly discussed in
Arcelona v. Court of Appeals,39 to quote:
An indispensable party is a party who has
such an interest in the controversy or subject
matter that a final adjudication cannot be
made, in his absence, without injuring or
affecting that interest, a party who has not
only an interest in the subject matter of the
controversy, but also has an interest of such
nature that a final decree cannot be made
without affecting his interest or leaving the
controversy in such a condition that its final
determination may be wholly inconsistent
with equity and good conscience. It has also
been considered that an indispensable party
is a person in whose absence there cannot be

From the records of the case, it appears that the

shares of the barangays in the IRA had already been
remitted by the Department of Budget and
Management (DBM) to the LBP Marawi Branch where
they were kept in the accounts opened in the names
of the barangays.
By virtue of the deposits, there exists between the
barangays as depositors and LBP a creditor-debtor
relationship. Fixed, savings, and current deposits of
money in banks and similar institutions are governed

a determination between the parties already

before the court which is effective, complete,
or equitable. Further, an indispensable party
is one who must be included in an action
before it may properly go forward.

availability of funds for the purpose. Vouchers

and payrolls shall be certified to and
approved by the head of the department or
office who has administrative control of the
fund concerned, as to the validity, propriety,
and legality of the claim involved. Except in
cases of disbursements involving regularly
recurring
administrative
expenses
xxx
approval of the disbursement voucher by the
local chief executive himself shall be required
whenever local funds are disbursed.

A person is not an indispensable party,

however, if his interest in the controversy or
subject matter is separable from the interest
of the other parties, so that it will not
necessarily be directly or injuriously affected
by a decree which does complete justice
between them. Also, a person is not an
indispensable party if his presence would
merely permit complete relief between him
and those already parties to the action, or if
he has no interest in the subject matter of the
action. It is not a sufficient reason to declare
a person to be an indispensable party that his
presence will avoid multiple litigation.40

Thus,
as
a
safeguard
against
unwarranted
disbursements, certifications are required from: (a)
the local budget officer as to the existence and
validity of the appropriation; (b) the local accountant
as to the legal obligation incurred by the
appropriation; (c) the local treasurer as to the
availability of funds; and (d) the local department
head as to the validity, propriety and legality of the
claim against the appropriation.48

In Arcelona,
the
Court
also
dwelt
on
the
consequences of failure to include indispensable
parties in a case, categorically stating that the
presence of indispensable parties is a condition for
the exercise of juridical power 41and when an
indispensable party is not before the court, the action
should
be
dismissed.42 The
absence
of
an
indispensable party renders all subsequent actions of
the court null and void for want of authority to act,
not only as to the absent parties but even as to those
present.43

Further, the GAAM provides for the basic

requirements
applicable
to
all
classes
of
disbursements that shall be complied with, to wit:
a) Certificate of Availability of Fund.
Existence of lawful appropriation, the
unexpended balance of which, free from
other obligations, is sufficient to cover the
expenditure, certified as available by an
accounting officer or any other official
required to accomplish the certificate.

The joinder of indispensable parties is mandatory.

Without the presence of indispensable parties to the
suit, the judgment of the court cannot attain real
finality. Strangers to a case are not bound by the
judgment rendered by the court.44

Use of moneys appropriated solely for the

specific purpose for which appropriated, and
for no other, except when authorized by law
or by a corresponding appropriating body.

Clearly, this case was not initiated by the barangays

themselves. Neither did the barangay chairmen file
the suit in representation of their respective
barangays. Nothing from the records shows
otherwise. On this score alone, the case in the lower
court should have been dismissed.

b) Approval of claim or expenditure by

head of office or his duly authorized
representative.
c) Documents to establish validity of
claim. Submission of documents and other
evidences to establish the validity and
correctness of the claim for payment.

Even if the barangays themselves had filed the case,

still it would not prosper. The case involves
government funds and as such, any release
therefrom can only be done in accordance with the
prevailing rules and procedures.

d) Conformity of the expenditure

existing laws and regulations.

to

e) Proper accounting treatment.49

The Government Accounting and Auditing Manual

(GAAM) provides that the local treasurers shall
maintain the depositary accounts in the name of their
respective local government units with banks. 45 Under
the Local Government Code, the treasurer is given
the power, among others, to: (1) keep custody of
barangay
funds
and
properties;
and
(2) disburse funds in accordance with the financial
procedures provided by the Local Government
Code.46 The same manual defines disbursements as
constituting all cash paid out during a given period
either in currency or by check.47

This prescribed legal framework governing the

release and disbursement of IRA funds to the
respective barangays disabuses from the notion that
a barangay chairman, relying solely on his authority
as a local executive, has the right to demand physical
possession of the IRA funds allocated by the national
government to the barangay. The right to demand for
the funds belongs to the local government itself
through the authorization of their Sanggunian.50

Sec. 344 of the Local Government Code further

provides for the following requirements in cases of
disbursements, to wit:

One final note. There is no conclusive proof from the

records showing that the IRA funds for the 2 nd and
3rdquarters of the barangays concerned remitted by
the DBM had already been

Sec. 344. No money shall be disbursed unless

the local budget officer certifies to the
existence of appropriation that has been
legally made for the purpose, the local
accountant has obligated said appropriation,
and the local treasurer certifies to the

withdrawn from the LBP Marawi Branch. Considering

the implications of this action of possibly depriving
several local government units of their IRAs, the
Court took the initiative to request the COMELEC to
issue certifications on who were the duly elected
chairmen of the barangays concerned. The COMELEC

10

issued to this Court a list of the elected barangay

chairmen which confirmed the re-election of
respondents as barangay chairmen of their respective
barangays.51 If withdrawals were indeed made,
whether by the respondents or by impostors, the
matter deserves to be investigated since public funds
are involved. Accordingly, we refer the matter to the
Department of Interior and Local Government (DILG)
for investigation and appropriate action.

The alleged withdrawals of deposits representing the

Internal Revenue Allotments for the 2nd and
3rd Quarters of 1997 of the barangays concerned from
the Land Bank of the Philippines, Marawi Branch, are
referred to the DILG for investigation and appropriate
action. The DILG is hereby DIRECTED to INFORM the
Court of the result of its investigation within thirty
(30) days from the completion thereof.
No pronouncement as to costs.

WHEREFORE, premises considered, the petition is

GRANTED. The assailed Decisions of the Court of
Appeals and the Regional Trial Court are REVERSED
and SET ASIDE. The Petition for Mandamus filed
before the Regional Trial Court is ordered DISMISSED.

SO ORDERED.

11