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International Corporate Bank vs.

(351 SCRA 516)


The respondents obtained a loan from the petitioner to purchase a motor vehicle (car). The respondents
defaulted in payment of installments. A civil case was filed by the petitioner which resulted later into
negotiations in lowering the remaining unpaid balance from P184,000.00 to P150,000.00, detaining the car
until payment thereof. Respondent delivered a manager’s check but petitioner insisted on the signing of
“Joint Motion to Dismiss”, still holding the motor vehicle. Respondent initiated civil action for damages
before MTC but the case was dismissed for lack of merit. On appeal to RTC, the decision of MTC was
reversed ordering herein petitioners to indemnify the respondents. The Court of Appeals likewise affirmed
the decision of the RTC.


Whether or not the respondents are entitled of indemnification for damages.


NO. Petitioner’s act of requiring respondents to sign the Joint Motion to Dismiss can not 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. In fact, the act of petitioner bank in lowering the debt of respondent from P184,000.00
to P150,000.00 is indicative of its good faith and sincere desire to settle the case.

The decision of the Court of Appeals affirming the decision of the RTC was set aside. Respondents were
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, afterwhich, petitioner is to return the subject
motor vehicle in good working condition.

International Corporate Bank vs. Sps. Gueco
G.R. No.141968
February 12, 2001


Spouses Gueco obtained a loan from petitioner International Corporate Bank (now Union Bank of
Philippines) to purchase a car. Respondent spouses executed a promissory note in consideration, which
were payable in monthly installment and chattel mortgage over the car.

The spouses however, defaulted payment. The car was detained by the bank. When Dr. Gueco delivered
the manger’s check of P150,000, the car was not released because of his refusal to sign the Joint Motion to
Dismiss (JMD).

The bank insisted that the JMD is a standard operating procedure to effect a compromise and 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


Whether or not International Corporate 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. The court fails 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 joint motion to dismiss 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 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.