Fidelity Savings and Mortgage Bank v. Cenzon (G.R. No. L-46208)


Respondent spouses Santiago maintained a savings and time deposit with petitioner bank. The Monetary Board found petitioner bank to be insolvent and ordered for its assets to be taken charged of by the Acting Superintendent. The PDIC paid spouses for their deposits with petitioner bank but there was still a remaining balance. The Monetary Board then directed the liquidation of the affairs of petitioner bank and a subsequent petition for assistance and supervision in liquidation was filed in the court. The liquidation proceedings still pending, respondent spouses sent demand letters to petitioner bank for the payment of their deposits. The court found in favor of respondent spouses.


Whether or not petitioner bank may be adjudged to pay interest on unpaid deposits even after its closure by the Central Bank by reason of insolvency.

Ruling: NO.

It is settled jurisprudence that a banking institution which has been declared insolvent and subsequently ordered closed by the Central Bank of the Philippines cannot be held liable to pay interest on bank deposits which accrued during the period when the bank is actually closed and non-operational. In The Overseas Bank of Manila vs. Court of Appeals and Tony D. Tapia, we held that:

It is a matter of common knowledge, which We take judicial notice of, that what enables a bank to pay stipulated interest on money deposited with it is that thru the other aspects of its operation it is able to generate funds to cover the payment of such interest. Unless a bank can lend money, engage in international transactions, acquire foreclosed mortgaged properties or their proceeds and generally engage in other banking and financing activities from which it can derive income, it is inconceivable how it can carry on as a depository obligated to pay stipulated interest. Conventional wisdom dictates this inexorable fair and just conclusion. And it can be said that all who deposit money in banks are aware of such a simple economic proposition. Consequently, it should be deemed read into every contract of deposit with a bank that the obligation to pay interest on the deposit ceases the moment the operation of the bank is completely suspended by the duly constituted authority, the Central Bank.

From the aforecited authorities, it is manifest that petitioner cannot be held liable for interest on bank deposits which accrued from the time it was prohibited by the Central Bank to continue with its banking operations. The order, therefore, of the Central Bank as receiver/liquidator of petitioner bank allowing the claims of depositors and creditors to earn interest up to the date of its closure is in line with the doctrine laid down in the jurisprudence above cited.


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