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Fidelity Savings Bank v. Cenzon

Fidelity Savings and Mortgage Bank was declared insolvent by the Monetary Board in 1969 and ordered to cease operations. Spouses Santiago had deposited 100,000 pesos with Fidelity Savings. The Philippine Deposit Insurance Corporation paid them 10,000 pesos, leaving a 90,000 peso balance. The Spouses filed a case against Fidelity Savings seeking the 90,000 balance plus interest, damages, and fees. The Supreme Court ruled that Fidelity Savings did not have to pay interest accrued or damages since it was not operational after being ordered closed, and the proper action was for the Spouses to file a claim in the bank's liquidation proceedings.

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Luigi Macababbad
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56 views2 pages

Fidelity Savings Bank v. Cenzon

Fidelity Savings and Mortgage Bank was declared insolvent by the Monetary Board in 1969 and ordered to cease operations. Spouses Santiago had deposited 100,000 pesos with Fidelity Savings. The Philippine Deposit Insurance Corporation paid them 10,000 pesos, leaving a 90,000 peso balance. The Spouses filed a case against Fidelity Savings seeking the 90,000 balance plus interest, damages, and fees. The Supreme Court ruled that Fidelity Savings did not have to pay interest accrued or damages since it was not operational after being ordered closed, and the proper action was for the Spouses to file a claim in the bank's liquidation proceedings.

Uploaded by

Luigi Macababbad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Fidelity Savings and Mortgage Bank v.

Cenzon
April 5, 1990
Topic: Regular Banking Unit/Bank Proper

FACTS
1. Spouses Timoteo and Olimpia Santiago (Sps. Santiago)
deposited a total of 100,000 pesos with Petitioner Fidelity
Savings and Mortgage Bank (Fidelity Savings):
a. May 16, 1968: 50,000 pesos under Savings Account
No. 160536
b. July 6, 1968: 50,000 pesos under Cert. of Time
Deposit No. 0210
2. February 18, 1969: The Monetary Board, as per reports,
found that Fidelity Savings is insolvent
a. Thus, it issued Resolution No. 350 deciding to:
i. Forbid Fidelity Savings from doing business
in the Philippines
ii. Instruct Acting Superintendent of Banks to
Take Change of the Bank’s Assets
3. Superintendent of banks took charge of the assets of
Fidelity Savings
4. October 10, 1969: Phil. Deposit Insurance Commission
paid Sps. Santiago 10,000 pesos for their 100,000 deposit
with Fidelity Savings. This left a balance of 90,000 pesos
5. December 9, 1969: Monetary Board issued Resolution No.
2124 directing the liquidation of the affairs of Fidelity
Savings
a. Up to present, liquidation proceedings has not yet
been terminated
6. Thus, Sps. Santiago, after sending demand letters to
Fidelity Savings, filed an action for a sum of money against
Fidelity Savings with CFI Manila
7. CFI Manila ruled in favor of Sps. Santiago, ordering
Fidelity Savings to pay:
a. 90,000 with interest
b. 30,000 exemplary damages
c. 10,000 attorney’s fees
8. Hence, this petition by Fidelity Savings

ISSUE/HELD
W/N Fidelity Savings may be adjudged to pay interest on unpaid
balances, exemplary damages, and attorney’s fees - NO

As to the interest
Concept/Doctrine
1. 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
a. Rationale: Overseas Bank of Manila v. CA, what
enables a bank to pay stipulated interest on money
deposited with it are the other aspects of its
operation where it is able to generate funds to cover
the payment of such interest. Without said
operations generating income, it cannot fulfill its
obligation to pay stipulated interest
In this case
1. Fidelity Savings shall not be liable for interest on bank
deposits which accrued from the time it was prohibited by
the Central Bank to continue with its banking operations, or
when Resolution No. 350 to that effect was issued on
February 18, 1969.

As to the damages
Concept
1. In the absence of fraud, bad faith, malice or wanton
attitude, petitioner bank may not be held responsible for
damages which may be reasonably attributed to the non-
performance of the obligation
In this case
1. There was no fraud or bad faith on the part of Fidelity
Savings in accepting the deposits of private respondents
2. The demand to pay the deposits was made and Civil Case
No. 84800 was filed in the trial court several months after
its insolvency and after Central Bank had ordered
petitioner's closure
a. By that time, petitioner bank was no longer in a
position to comply with its obligations to its
creditors, including Sps. Santiago
3. Moreover, it was also not proven that Fidelity Savings
actually engaged in anomalous real estate transactions
4. Proper remedy of Sps. Santiago: file claim in liquidation
proceedings

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