Facts:

This case involves a petition for review on certiorari filed by Allied Banking Corporation (now Philippine National Bank) against Elizabeth Sia. The events leading to this case began when Elizabeth maintained two accounts with the now-defunct Orient Commercial Banking Corporation (Orient Bank) at its Gorordo, Cebu City Branch. One account was solely under her name (Account No. 023190001020), while the other was a joint account with her father, See Sia (Account No. 023190001031). Following the closure of Orient Bank on October 15, 1998, the total uninsured deposits in these accounts amounted to P5,228,883.71. Allied Bank assumed the uninsured deposit liabilities of Orient Bank with the assistance of the Philippine Deposit Insurance Corporation (PDIC).

On December 13, 1999, See Sia executed a Special Power of Attorney (SPA) appointing Elizabeth as his attorney-in-fact to claim and receive payment from the PDIC for the deposits in Account No. 023190001020. On the same day, Eli...

Facts:

Background of the Case

• Elizabeth Sia maintained two accounts with the now-defunct Orient Commercial Banking Corporation (Orient Bank):
  1. Account No. 023190001020: Solely under Elizabeth’s name.
  2. Account No. 023190001031: A joint account with her father, See Sia.
• At the time of Orient Bank’s closure on October 15, 1998, the two accounts had uninsured deposits totaling P5,228,883.71.
• Allied Banking Corporation (Allied Bank) assumed Orient Bank’s uninsured deposit liabilities with the assistance of the Philippine Deposit Insurance Corporation (PDIC).

Deed of Assignment and Special Power of Attorney

• On December 13, 1999, See Sia executed a Special Power of Attorney (SPA), authorizing Elizabeth to claim and receive payment from PDIC for the deposits in Orient Bank Account No. 023190001020.
• On the same date, Elizabeth and Allied Bank executed a Deed of Assignment, wherein Elizabeth assigned a portion of the uninsured deposits (amounting to P4,470,825.22) to Allied Bank.
• Allied Bank agreed to pay the amount in installments over five years, crediting the payments to Elizabeth’s Allied Bank Savings Account No. 0570231382, opened under her name.

Death of See Sia and Freezing of the Account

• See Sia died on May 4, 2000.
• On December 14, 2000, Allied Bank received a letter from Atty. Rolando Lim, counsel for See Sia’s heirs, requesting the bank to freeze any transactions related to See’s account pending the settlement of his estate.
• Allied Bank complied and temporarily froze Elizabeth’s Savings Account No. 0570231382, preventing her from making withdrawals.

Elizabeth’s Complaint

• Elizabeth filed a complaint for specific performance, breach of contract, and damages against Allied Bank, arguing that the bank’s refusal to allow her to withdraw funds was malicious and unfounded.
• She claimed that the account was solely under her name, and Allied Bank had no right to deny her access to the funds.

Defense of Allied Bank

• Allied Bank argued that the freezing of the account was justified because the funds originated from both Elizabeth’s and See Sia’s Orient Bank accounts.
• It contended that the Deed of Assignment clearly indicated that See Sia owned a portion of the funds in the account, and the bank acted in good faith to protect the interests of See’s heirs.

Issue:

1. Whether the Court of Appeals committed reversible error in ruling that Allied Bank had no legal basis to temporarily freeze Elizabeth’s savings account.
2. Whether Allied Bank’s freezing of the account constituted a breach of contract.
3. Whether Elizabeth is entitled to damages for the alleged breach of contract.

Ruling:

The Supreme Court granted Allied Bank’s petition, reversing the decisions of the lower courts. The Court held that Allied Bank had legal basis to temporarily freeze Elizabeth’s savings account under Section 97 of the Tax Reform Act of 1997 (R.A. No. 8424). The bank acted in good faith upon learning of See Sia’s death and the conflicting claims over the account. The Court dismissed Elizabeth’s complaint for lack of merit.

Ratio:

• (Unlock)