G.R. No. L-49353 June 11, 1981
THE OVERSEAS BANK OF MANILA, petitioner, vs. COURT OF APPEALS and TONY D. TAPIA, in his capacity as Attorney-in-Fact of ENRIQUETA MICHEL DE CHAMPOURCIN, respondents.

FACTS

Private respondent Tony D. Tapia, as attorney-in-fact, filed a collection suit against petitioner Overseas Bank of Manila (TOBM) to recover the proceeds of a P100,000.00 time deposit certificate with 4.5% annual interest. The trial court ruled in favor of Tapia, ordering TOBM to pay the principal sum plus accrued interest. The Court of Appeals affirmed this decision in toto.
During the pendency of the case, significant events transpired concerning TOBM’s operational status. The Central Bank, through a series of Monetary Board Resolutions, suspended TOBM’s operations in 1968. Although the Supreme Court later annulled these resolutions in Ramos vs. Central Bank for having been issued with grave abuse of discretion, the bank’s operations had already been factually suspended. Subsequently, the Supreme Court approved a Program of Rehabilitation for TOBM, which outlined a process for settling obligations with depositors and creditors over time, without explicitly mentioning the payment of interest on deposits during the rehabilitation period.

ISSUE

Whether TOBM is liable to pay interest on the time deposit during the period it was under factual suspension of operations and rehabilitation pursuant to the Supreme Court-approved program.

RULING

The Supreme Court modified the decision of the Court of Appeals, ruling that TOBM is not liable for interest on the deposit during the period of its factual closure and rehabilitation. The legal logic rests on the principle of equity and the practical impossibility of performance due to the bank’s forced inactivity. The Court reasoned that the Central Bank’s suspension orders, though later annulled, effectively disabled TOBM from engaging in banking operations and generating income. Therefore, it would be unjust to obligate the bank to pay interest for a period when it was prevented by regulatory action from performing its normal functions and earning the means to pay.
Furthermore, the Court emphasized that the approved Rehabilitation Program, which governs the settlement of TOBM’s liabilities, refers only to the payment of deposit principals and makes no provision for the accrual or payment of interest during the rehabilitation period. The silence of the Program on interest, coupled with the bank’s incapacitated state, indicates an intent to exempt it from such liability to facilitate its recovery. The deposit claim itself must be settled by negotiation under the terms of the Rehabilitation Program. This ruling was established as a guiding precedent for all similar obligations of the bank during its period of actual closure.