In Apique v. Fahnenstich, the Supreme Court clarified the scope of withdrawal rights in joint bank accounts, ruling that while any co-depositor can transact with the bank, their rights against each other are governed by their agreement and the account’s purpose. This means a co-depositor cannot freely withdraw funds for personal use if the account was created for a specific purpose and withdrawals are subject to certain conditions, such as covering business expenses.
Shared Account, Divided Rights: When Can a Co-Depositor Withdraw Funds?
The case revolves around siblings Dominador Apique and Evangeline Apique Fahnenstich. Evangeline, working in Germany, opened a joint “OR” savings account with Dominador in the Philippines to manage funds for her business projects. This type of account allowed either sibling to make transactions independently. However, Dominador withdrew P980,000.00 without Evangeline’s consent and for reasons unrelated to her business. This led to a legal battle over whether Dominador had the right to withdraw the funds.
The heart of the dispute lies in understanding the nature of a joint account and the extent of authority it grants to each account holder. The Civil Code provides guidance on co-ownership, stating:
Art. 485. The share of the co-owners, in the benefits as well as in the charges, shall be proportional to their respective interests. Any stipulation in a contract to the contrary shall be void.
The portions belonging to the co-owners in the co-ownership shall be presumed equal, unless the contrary is proved.
This principle underscores the presumption of equal shares in co-owned property, including joint bank accounts. The Supreme Court acknowledged that, generally, each account holder in a joint account has an undivided right to the entire balance. They can deposit and withdraw funds without needing the other’s consent during their lifetime. Rivera v. Peoples Bank and Trust Co., 73 Phil. 546, 547 (1942) supports this.
However, the Court emphasized a critical distinction: while banks treat all co-depositors as having equal access, the relationship between the depositors can be different. Their rights are defined by their own agreements and the intended purpose of the account. In this case, the joint account was specifically created to facilitate fund transfers for Evangeline’s business projects. Dominador’s authority to withdraw was, therefore, tied to this specific purpose. Since the withdrawal was unrelated to Evangeline’s business, Dominador exceeded his authority.
Dominador argued that the withdrawn amount was compensation for his services as administrator of Evangeline’s business affairs, promised by Evangeline’s husband. However, the Court found this claim unsubstantiated due to a lack of evidence. The burden of proof rests on the party asserting a claim or defense. In this instance, Dominador needed to prove that he was entitled to the funds. As the Supreme Court has noted, “For the defendant, an affirmative defense is one which is not a denial of an essential ingredient in the plaintiffs cause of action, but one which, if established, will be a good defense, i.e. an avoidance of the claim.” Bank of the Phil. Islands v. Sps. Royeca, 581 Phil. 188, 194 (2008). Dominador failed to meet this burden.
The Court also addressed Dominador’s claim for compensation based on the principle of quantum meruit (reasonable value of services rendered). Because this claim was not raised as an affirmative defense or counterclaim in his initial answer, it was deemed waived, reinforcing the importance of proper legal pleading.
Ultimately, the Supreme Court ordered Dominador to return the withdrawn amount but made two key modifications. First, they acknowledged Dominador’s initial contribution of P100,000.00 to the joint account. This amount was deducted from the total to be returned. Second, the Court adjusted the interest rate applied to the judgment. In line with BSP-MB Circular No. 799 and the ruling in Nacar v. Gallery Frames, the interest rate after the finality of the decision was reduced from 12% to 6% per annum.
FAQs
| What was the key issue in this case? | The central issue was whether a co-depositor in a joint “OR” bank account could withdraw funds for personal use, despite the account being intended for specific business purposes. |
| What is a joint “OR” account? | A joint “OR” account allows any of the named account holders to transact independently, without requiring the consent of the other co-depositors. |
| Did the Supreme Court allow Dominador to keep the withdrawn money? | No, the Supreme Court ordered Dominador to return the money, minus his initial contribution, because the withdrawal was not for the account’s intended purpose. |
| What is ‘quantum meruit’ and why was it relevant here? | Quantum meruit is a principle that allows compensation for services rendered. However, Dominador’s claim for compensation under this principle was rejected because it was not raised in his initial answer to the complaint. |
| What was the basis for the court’s decision? | The Court based its decision on the principle that while co-depositors have rights to the account, those rights are limited by the agreement between them and the purpose for which the account was opened. |
| How did the Court modify the lower court’s decision? | The Court modified the decision by deducting Dominador’s initial contribution to the account and adjusting the post-judgment interest rate. |
| What is the significance of the account’s intended purpose? | The account’s intended purpose is crucial because it defines the limits of each co-depositor’s authority to withdraw funds, especially in relation to each other. |
| What interest rate applies after the court’s decision becomes final? | The interest rate after the finality of the decision is 6% per annum, in accordance with BSP-MB Circular No. 799. |
This case serves as a reminder that while joint accounts offer convenience, the rights of co-depositors are not absolute and are subject to their agreements and the account’s intended use. Clear communication and documentation regarding the purpose of the account and the agreed-upon withdrawal conditions are essential to avoid future disputes.
For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.
Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Dominador M. Apique v. Evangeline Apique Fahnenstich, G.R. No. 205705, August 05, 2015