Wednesday, June 16, 2010

Overseas Bank of Manila vs. Cordero

Facts:

Private respondent opened a 1-year time deposit with petitioner bank amounting to P80,000, with interest of 6% p.a. Due to its distressed financial condition, the bank was unable to pay. Cordero instituted an action before the CFI Manila. Petitioner raised the defenses of insolvency and prejudice to other depositors. The lower court, and the Court of Appeals, ruled in favor of Cordero. Hence, the instant petition for review on certiorari.

Certain supervening events rendered the issue moot and academic. Respondent’s brother and attorney-in-fact sent a letter to the Commercial Bank of Manila (petitioner’s successor-in-interest), acknowledging receipt of P10,000, and another manifestation for P73,840, with waiver of damages. Upon further examination, it was found that the respondent’s brother has no SPA. Respondent’s brother submitted the SPA, with explanatory comment that the waiver applies only to third party claims, suits and damages, not to interest and attorney’s fees.

Issue:

Whether respondent is entitled to interest and attorney’s fees

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 attorney’s fees. Petitioner’s refusal to pay was not due to a willful and dishonest refusal to comply with its obligation but to restrictions imposed by Central Bank.

1 comment:

  1. I think Commercial Bank of Manila should still be liable and pay the interest to the depositor because they are the ones who promised the interest after all. For the best legal services in the Philippines, visit: http://ndvlaw.com.

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