Allied Bank vs.

Lim Sio Wan

G.R. No. 133179
March 27, 2008

Facts: Lim Sio Wan deposited a money market placement worth Php1,152,597.35 to
Allied Bank for a term of 31 days to mature on December 15, 1983. On December 5,
1983, a person claiming to be Lim Sio Wan called up Cristina So, an officer of Allied
Bank, and instructed her to preterminate the money market placement and issue a
manager's check to Deborah Dee Santos. The check was cross-checked for Payees
Account Only and given to Santos, who deposited it to the account of Filipinas
Cement Corporation (FCC) at Metrobank. Lim Sio Wan filed a complaint with the
RTC against Allied Bank and Metrobank to recover the proceeds of the money market
placement. The RTC rendered the following decisions: Ordering Allied Banking
Corporation to pay plaintiff the amount of P1,158,648.49 plus 12% interest per annum
from March 16, 1984 until fully paid, ordering defendant Allied Bank to pay plaintiff
P100,000.00 by way of moral damages, P173,792.20 by way of attorney's fees, and
P10,000 by way of costs of suit. Allied alleged unjust enrichment on the part of
Producers Bank, resulting in a modification of the decision.

Issue: Whether or not the the money market transaction between the petitioner and
the private respondent is in the nature of a loan?

Held: Yes. The money market transaction between Allied Bank and Lim Sio Wan is
in the nature of a loan.

Supreme Court ruled in a line of cases that a bank deposit is in the nature of a simple
loan or mutuum where depositors are creditors of the bank for the money market
placement. A money market is a market dealing in standardized short-term
credit instruments involving large amounts where lenders and borrowers do not deal
directly with each other but through a middle man or dealer in open market. In a
money market transaction, the investor is a lender who loans his money to a borrower
through a middleman or dealer.

Here, Lim Sio Wan is entitled to payment upon his request, or upon maturity of the
placement, or until the bank is released from its obligation as debtor. Until any such
event, the obligation of Allied to Lim Sio Wan remains not extinguished.