International Corporate Bank vs. Gueco

International Corporate Bank vs. Gueco
351 SCRA 516


Respondent Gueco spouses obtained a loan from petitioner International Corporate Bank (now Union Bank of Philippines) to purchase a car – Nissan Sentra 1989 model.

In consideration, spouses executed promissory note which were payable in monthly installment & chattel mortgage over the car.

The spouses defaulted payment. Dr. Gueco had a meeting & the unpaid installment of P184k was reduced to P150k. However, the car was detained by the bank.

When Dr. Gueco delivered the manger’s check of P150k, the car was not released because of his refusal to sign the Joint Motion to Dismiss.

The bank insisted that the JMD is a standard operating procedure to effect a compromise & to preclude future filing of claims or suits for damages.

Gueco spouses filed an action against the bank for fraud, failing to inform them regarding JMD during the meeting & for not releasing the car if they do not sign the said motion.


WON the bank was guilty of fraud? NO


Fraud has been defined as the deliberate intention to cause damage or prejudice. It is the voluntary execution of a wrongful act, or a willful omission, knowing and intending the effects which naturally and necessarily arise from such act or omission. the fraud referred to in Article 1170 of the Civil Code is the deliberate and intentional evasion of the normal fulfillment of obligation.

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.

The JMD cannot in any way have prejudiced Dr. Gueco. The motion to dismiss was in fact also for the benefit of Dr. Gueco, as the case filed by petitioner against it before the lower court would be dismissed with prejudice. The whole point of the parties entering into the compromise agreement was in order that Dr. Gueco would pay his outstanding account and in return petitioner would return the car and drop the case for money and replevin before the Metropolitan Trial Court. The joint motion to dismiss was but a natural consequence of the compromise agreement and simply stated that Dr. Gueco had fully settled his obligation, hence, the dismissal of the case. Petitioner’s act of requiring Dr. Gueco to sign the joint motion to dismiss cannot be said to be a deliberate attempt on the part of petitioner to renege on the compromise agreement of the parties.

The law presumes good faith. Dr. Gueco failed to present an iota of evidence to overcome this presumption. In fact, the act of petitioner bank in lowering the debt of Dr. Gueco from P184,000.00 to P150,000.00 is indicative of its good faith and sincere desire to settle the case. If respondent did suffer any damage, as a result of the withholding of his car by petitioner, he has only himself to blame. Necessarily, the claim for exemplary damages must fail. In no way, may the conduct of petitioner be characterized as “wanton, fraudulent, reckless, oppressive or malevolent.”

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