Reyes, Monique Anne R.
A-234
CASE DIGEST:
G.R. No. 141968 INTERNATIONAL CORPORATE BANK v. GEUCO 351 SCRA 516
INTERNATIONAL CORPORATE BANK v. GEUCO
G.R. No. 141968
February 12, 2001
351 SCRA 516
Facts:
Spouses Francis S. Gueco and Ma. Luz E. Gueco obtained a loan from petitioner
International Corporate Bank (now Union Bank of the Philippines) to purchase a car. As a
consideration thereof, the Spouses executed a promissory notes which is payable in monthly
installments and chattel mortgage over the car to serve as a security for the notes.
However, the Spouses defaulted in payment of their installments. Consequently, on
August 7, 1995, the bank has filed a civil action docketed as Civil Case NO. 658-95 for “Sum of
Money with Prayer for a Writ of Replevin” before the Metropolitan Trial Court of Pasay City,
Branch 45. After meeting in the bank premises, negotiations are made to lower the remaining
unpaid balance detaining the car until payment thereof. Respondent delivered a manager’s check,
but petitioner insisted on the signing of “Joint Motion to Dismiss” and are still holding the car.
The joint motion is just a standard operating procedure in their bank in order to compromise and
to prelude the counterclaims and suits for damages. Respondent initiated civil action for damages
before Metropolitan Trial Court, but the case was dismissed because of failure in presenting
evidence or merit. The petitioners were ordered to compensate the respondent due to the
overturned of the decision of Metropolitan Trial Court on their appeal to the Regional Trial
Court. The Court of Appeals also upheld the decision of the Regional Trial Court. Respondents
are furthered ordered to pay for the original obligation amounting to P150, 000 to the petitioner
upon surrender of the manager’s check in the latter’s possession, after which the petitioner is to
return the car in a good working condition.
Issue:
(1). Whether or not the signing of the joint motion to dismiss is fraudulent.
(2). Whether or not the bank was negligent in opting not to deposit or use the manager’s check.
Ruling:
1. No. Petitioner may have been remiss in informing Dr. Gueco that the signing of a joint
motion to dismiss is a standard operating procedure of petitioner bank. However, this can
not in anyway joint motion to dismiss is a standard operating procedure. It is a comprise
agreement between two parties in which the Spouses would pay his outstanding account
and in return the petitioner would return the car and drop the case for money and replevin
before the Metropolitan Trial Court. The act of the petitioner bank in lowering the debt of
the respondent from has denoted its good faith and its sincerity to settle the case. Also, it
is beneficial for the respondent to sign the Joint Motion to dismiss, for it has advantages.
2. In this situation, there is no bad faith or negligence in the part of ICB. Dr. Gueco
delivered a manager's check representing the reduced amount of P150,000.00 and
demanded the immediate release of his car. On the other hand, there is a condition, which
is to sign the Joint Motion to dismiss that must be satisfied to disregard the “hold order”
and the release of the car. While there is controversy as to whether the document
evidencing the order to hold payment of the check was formally offered as evidence by
petitioners. It appears from the pleadings that the said check has not been encashed.
.
The decision of the Court of Appeals affirming the decision of the Regional Trial Court is SET
ASIDE. Respondents are further ordered to pay the original obligation amounting to
P150,000.00 to the petitioner upon surrender or cancellation of the manager's check in the latter's
possession, after which, petitioner is to return the subject motor vehicle in good working
condition.
Reasoning
(1). Article 1170 of the Civil Code is the deliberate and intentional evasion of the normal
fulfillment of obligation.11 We fail to see how the act of the petitioner bank in requiring the
respondent to sign the joint motion to dismiss could constitute as fraud.
(2). In finding the petitioner liable for damages, both the Regional Trial Court and the
Court of Appeals ruled that there was fraud on the part of the petitioner. The CA thus declared:
The lower court's finding of fraud which became the basis of the award of damages was
likewise sufficiently proven. Fraud under Article 1170 of the Civil Code of the Philippines, as
amended is the 'deliberate and intentional evasion of the normal fulfillment of obligation. When
petitioner refused to release the car despite respondent's tender of payment in the form of a
manager's check, the former intentionally evaded its obligation and thereby became liable for
moral and exemplary damages, as well as attorney's fees.
(3). The decision of the Regional Trial Court, which was affirmed in toto by the Court of
Appeals, orders the petitioner:
1. to return immediately the subject car to the appellants in good working condition.
Appellee may deposit the Manager's Check - the proceeds of which have long been under the
control of the issuing bank in favor of the appellee since its issuance, whereas the funds have
long been paid by appellants to secure said Manager's Check over which appellants have no
control.
