Question XII, Civil Law, 2018 Bar Exam

Saachi opened a savings bank account with Shanghainese Bank. He made an initial deposit of PhP100,000. Part of the bank opening forms that he was required to sign when he opened the account was a Holdout Agreement which provided that, should he incur any liability or obligation to the bank, the bank shall have the right to immediately and automatically take over his savings account deposit. After he opened his deposit account, the Shanghainese Bank discovered a scam wherein the funds in the account of another depositor in the bank was withdrawn by an impostor. Shanghainese Bank suspected Saachi to be. the impostor, and filed a criminal case of estafa against him. While the case was still pending with the Prosecutor's office, the bank took over Saachi's savings deposit on the basis of the Holdout Agreement.

(a) What kind of contract is created when a depositor opens a deposit account with a bank? (2.5%)

(b) In this case, did the bank have the right to take over Saachi's bank deposit? (2.5%)

Suggested Answer:

A simple loan contract is created when a depositor opens a deposit account with a bank. Under the Civil Code, fixed, savings, and current deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan.

(b) No. Answer

Under jurisprudence, 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, t...