Overseas Bank of Manila vs.

Court of
Appeals G.R. No. L-45866, April 19, 1989
MARCH 16, 2014LEAVE A COMMENT

The obligation to pay interest on the deposit ceases the moment the
operation of the bank is completely suspended by the Central Bank.
Neither can respondent Cordero recover attorneys fees. Petitioners
refusal to pay was not due to a willful and dishonest refusal to comply
with its obligation but to restrictions imposed by Central Bank.
Facts:

Bonifacio Regalado and NAWASA entered a in a contract of sale with

instalments for various materials which the latter agreed to supply to the
former. In relation to a contract of sale between NAWASA, as vendor and
Bonifacio Regalado, as vendee, the amount corresponding to the first payment
by Regalado was placed on a time deposit with the Overseas Bank by the
NAWASA Treasurer for a period of 6 months. A second payment having been
made by Regalado, another time deposit was made by the NAWASA Treasurer
with the Overseas Bank, this time in the amount respresenting the balance of
the purchase price due from Regalado. The period of this second deposit was
fixed 1 year. Subsequently, NAWASAs Acting General Manager wrote to the
Overseas Bank advising that (1) as regards the first time deposit which had
already matured, NAWASA wished to withdraw it immediately, and (2) with
respect to the second time deposit of, it intended to withdraw it 60 days
thereafter as authorized by the parties agreement set forth in the certificate of
the deposit. Despite several letter request, nothing was heard from the
Overseas Bank. It did however pay to NAWASA interest on its time deposits.
After maturity of the second time deposit and Overseas Bank not responding to
the letter request of NAWASA for the remittance of the time deposits, NAWASA
then wrote to the Central Bank Governor about the matter. Apparently, even the
Central Bank was ignored by Overseas Bank. One last letter was written by
NAWASA to the Overseas Bank, reiterating its demand for the return of its
money. Again the letter went unheeded. NAWASA thus brought suit to recover
its deposits and damages. CFI Manila rendered judgment in favor of NAWASA
and ordered the bank to pay. CA affirmed the trial courts ruling. Hence this
petition.

Issue:

Whether or not Overseas Bank is liable to pay.

Held:

The obligation to pay interest on the deposit ceases the moment the

operation of the bank is completely suspended by the Central Bank. Neither can
respondent Cordero recover attorneys fees. Petitioners refusal to pay was not
due to a willful and dishonest refusal to comply with its obligation but to
restrictions imposed by Central Bank.
The banks contention that the punitive actions taken by the Central Bank
prevented the bank from conducting its business is devoid of merit. There is
absolutely no evidence of these facts in the record. Moreover, the suspension of
operations in 1968 could not possibly excuse non-compliance with the
obligations in question which matured in 1966. Again, the claim that the Central
Bank, by suspending the Overseas Banks banking operations, had made it
impossible for the Overseas Bank to pay its debts, whatever validity might be
accorded thereto, or the further claim that it had fallen into a distressed
financial situation, cannot in any sense excuse it from its obligation to the
NAWASA, which had nothing whatever to do with the Central Banks actuations
or the events leading to the banks distressed state.