Andreas vs. Bank of the Philippine Islands

No. 23836. September 9, 1925

MAIN TOPIC – Contracts – Interpretation Of Documents


The plaintiff applied to the defendant for a foreign credit to enable him to purchase coal in  Sydney, Australia, to be shipped to Manila. In connection therewith, plaintiff signed a written  “request for foreign credit” for the sum of 5,050.00 pounds, payable to the order of the bank of  New South Wales. It appears that in addition to the ¼ of one per cent commission specified in  the contract, that the defendant charged the plaintiff interest at the rate of 9 per cent per annum  on the amount of each of said drafts. It is admitted that such charge was made by the defendant  bank without the authority or knowledge of the Australian bank. Plaintiff not only paid the full  amount of the drafts drawn by the Australian bank, but he also paid the 9 per cent interest  charges which the defendant made where he did not know or understand the nature of them or  for whose benefit the charges were made. The plaintiff alleges that through an error, paid to  defendant interest and no part of such money paid has been returned or refunded by the  defendant. For answer the defendant denied the allegations and sought to prove that there was  an established usage and custom of the banks in Manila in like cases of charging and collecting  such interest from the time the draft is paid here, until the money is remitted by the local bank,  in the ordinary course of business, to the London bank. 

The lower court rendered judgment for the plaintiff for the amount claimed, with legal interest  from the date of the filing of the complaint. 


Whether or not the defendant bank is entitled to interest upon the money from the time the  plaintiff paid the draft until such time as the defendant should remit the amount of the original  draft to the London bank.


No. The application which the plaintiff signed in the nature of a “request for foreign credit” was  accepted by the defendant, and in legal effect it became the written contract between the parties,  and it is in writing, and nothing whatever is said about the payment of interest to the  defendant. If it had been the purpose and intent of the defendant to collect and receive the  interest in question, it should have been specified and provided for in the contract, and if in the  making of such interest charges the defendant relied upon an established usage and custom, it  should have alleged that fact as a further and separate defense, and the existence of them would  then become a question of fact.


The judgment of the lower court is affirmed, with costs. So ordered.