Assignee: Villaroza, Jozelle Monique C.
Case Short Name: Allied Banking Corp. vs. Sia
ALLIED BANKING CORPORATION (NOW PHILIPPINE NATIONAL BANK), PETITIONER,
VS.
ELIZABETH SIA, RESPONDENTS.
G.R. No. 195341, August 28, 2019
DOCTRINE
● In the context of banking and estate law, this case emphasizes that banks are authorized to
suspend transactions on a deceased depositor's account to comply with tax obligations
related to the estate, even in instances where an account is named solely in the surviving
depositor's name. Once the bank has knowledge of a depositor's death, it must withhold
any withdrawals until the estate matters are settled, ensuring proper handling of any joint
ownership of funds.
FACTS
● Elizabeth Sia maintained two accounts with the Orient Commercial Banking Corporation.
Elizabeth was the depositor of the first bank account, while the second bank account was a
joint account with her father, See Sia. When the Orient Bank had closed, the two accounts
had uninsured deposits in the total amount of P5,228,883.71 which petitioner Allied Banking
Corporation assumed the uninsured deposit liabilities of Orient Bank.
● See executed a Special Power of Attorney to Elizabeth. Consequently, Elizabeth and Allied
Bank executed a Deed of Assignment wherein she assigned P4,470,825.22 uninsured deposits
to Allied Bank while the latter will pay (1) 20% to be paid within one week from the signing
of the Deed and (2) the remaining balance to be paid in equal annual amortizations over a
period of five years.
● All payments were to be made by crediting Allied Bank Savings Account No. 0570231382, a
bank account which Elizabeth opened for the purpose of receiving the payments mentioned
in the Deed of Assignment.
● After some time, Atty. Lim, counsel of See’s heirs, informed Allied Bank that See died on
May 4, 2000 and requested to withhold any transaction relating to See's account with the said
bank pending settlement of his estate. Allied Bank acceded to Atty. Lim's request.
● When Elizabeth tried to make a withdrawal, she was not allowed to withdraw any amount
allegedly because of the claims by her siblings. Consequently, she was informed by Allied
Bank about Atty. Lim’s letter which was the reason why they temporarily froze the account.
● Elizabeth did not settle with her siblings but then filed this complaint for specific
performance, breach of contract, and damages claiming that despite her compliance with the
procedure for withdrawal of funds, Allied Bank still refused to allow her to make any
transaction. She argued that since she is the only one named as the depositor of SA No.
0570231382, then Allied Bank's refusal to allow her to withdraw from the said account was
without any basis.
● RTC: Allied Bank breached its contract and maliciously denied Elizabeth of her right to
withdraw. It noted that SA No. 0570231382 is under Elizabeth's name only and of the two
original Orient Bank accounts, one was solely under Elizabeth's name. Hence, Elizabeth
could, on her own, withdraw from either account.
● CA: affirmed. Although the records would show that the source of the funds for the subject
account indeed came from the settlement made by PDIC for the two Orient Bank accounts,
the same would no longer be relevant as the present account is clearly under Elizabeth's
name only.
● Allied Bank argues that it had legal basis to temporarily freeze SA No. 0570231382 as there’s
ample evidence showing that Elizabeth’s father owned a portion of SA No. 0570231382.
Moreover, although Elizabeth was the only one named as the depositor, the Deed of
Assignment clearly shows that the amounts paid by the PDIC and transferred to SA No.
0570231382 pertain not only to her but also to her father.
ISSUE/S
● Whether Allied Bank's temporary freezing of the subject account was proper?
- Yes.
RULING
● A peculiar circumstance is present in this case which sufficiently justified Allied Bank's
action in temporarily freezing SA No. 0570231382.
● The Supreme Court held that a bank is legally permitted to freeze the account of a deceased
depositor under Section 97 of Republic Act No. 8424, which states that if a bank is aware of a
depositor's death, it must not allow withdrawals from that account until tax obligations
related to the estate are settled. This authority is affirmed regardless of whether other
depositors on the account are alive—the bank must ensure the estate taxes are cleared before
allowing transactions.
● The authority of a bank to temporarily freeze the bank account of a deceased depositor could
be found in Section 97, Republic Act (R.A.) No. 8424 or the Tax Reform Act of 1997 which
provides that: “If a bank has knowledge of the death of a person, who maintained a bank
deposit account alone, or jointly with another, it shall not allow any withdrawal from the
said deposit account, unless the Commissioner has certified that the taxes imposed thereon
by this Title have been paid”.
● The purpose of Section 97 is to ensure the payment of the estate taxes due on the transfer of
the decedent's bank deposits before they could be exhausted or withdrawn by his heirs or by
any person who may have access to the said deposits.
● The authority applies with equal force to joint accounts even to a joint "and/or" account as
the law did not make any distinction. After all, it is the knowledge of the death of a co-
depositor which gives the bank the license to withhold any withdrawal from the bank
account.
● It is clear that Allied Bank could not be faulted for considering See as one of the depositors of
SA No. 0570231382 as See has a share in the deposits in the subject savings account. While
Elizabeth was the only one expressly named as the depositor of SA No. 0570231382, the Deed
of Assignment indicates that the subject savings account is essentially a joint account
between her and her father.
DISPOSITIVE
WHEREFORE, the present petition for review on certiorari is GRANTED. The Decision dated
December 16, 2009, and the Resolution dated January 12, 2011, of the Court of Appeals in CA-G.R.
CEB-CV No. 00955 are hereby REVERSED and SET ASIDE. The Complaint for Specific Performance,
Breach of Contract, and Damages filed by Elizabeth Sia against Allied Banking Corporation is
DISMISSED for lack of merit.
