HSBC Vs Catalan
HSBC Vs Catalan
HSBC Vs Catalan
Frederick Arthur Thomson drew 5 checks payable to Catalan in the total amount of HK$3.2 million. Catalan presented these checks to HSBC [Bank]. The checks were dishonored for having insufficient funds. Thomson demanded that the checks be made good because he, in fact, had sufficient funds.
Catalan knowing that Thomson had communicated with the Bank, asked HSBCBank to clear the checks and pay her the said amount. HSBC did not heed her.
Thomson died but Catalan was not paid yet. The account was transferred to HSBC [Trustee]. Catalan then requested Trustee to pay her. They still refused and even asked her to submit back to them the original checks for verification.
Catalan and her lawyer went to Hongkong on their own expense to personally submit the checks. They still were not honored, leading Catalan to file a suit against HSBC to collect her HK$3.2M ISSUES Whether or not HSBC Bank and Trustee are liable to pay damages to Catalan on the ground of Abuse of right under Article 19 of the Civil Code ARGUMENTS Petitioner: HSBC claims that they are a foreign corporation not doing business in the Philippines thus the courts do not have jurisdiction over them. Moreover, there is no cause of action because it was not alleged in the there was abuse of right. Respondent: Catalan claims that although HSBC has the right to examine the checks, they did so in bad faith because they required her to submit all sorts of documents and yet even upon showing that the checks were good, the Bank still refused to release the money to her. There was abuse of right on the part of the Bank. HOLDING & RATIO DECIDENDI THERE IS CAUSE OF ACTION, IT NEED NOT BE EXPRESSLY STATED, THE FACTS SUFFICIENTLY DESCRIBE THAT THERE WAS AN ABUSEOF RIGHT. APPLICATION: Article 19 of the Civil Code speaks of the fundamental principle of law and human conduct that a person "must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith." It sets the standards which may be observed not only in the exercise of ones rights but also in the performance of ones duties.
When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But a right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. A person should be protected only when he acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith; but not when he acts with negligence or abuse. There is an abuse of right when it is exercised for the only purpose of prejudicing or injuring another. The exercise of a right must be in accordance with the purpose for which it was established, and must not be excessive or unduly harsh; there must be no intention to injure another. Thus, in order to be liable under the abuse of rights principle, three elements must concur, to wit: (a) that there is a legal right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. HSBANK is being sued for unwarranted failure to pay the checks notwithstanding the repeated assurance of the drawer Thomson as to the authenticity of the check sand frequent directives to pay the value thereof to Catalan. Her allegations in the complaint that the gross inaction of HSBANK on Thomsons instructions, as well as its evident failure to inform Catalan of the reason for its continued inaction and non-payment of the checks, smack of insouciance on its part, are sufficient statements of clear abuse of right for which it may be held liable to Catalan for any damages she incurred resulting therefore. HSBANKs actions or lack thereof, prevented Catalan from seeking further redress with Thomson for the recovery of her claim while the latter was alive DECISION OF THE COURT: The Decision of the Court of Appeals, dated August 14, 2003, in CA-G.R. SP No. 75757 dismissing the petition for certiorari of the Hongkong and Shanghai Banking Corporation Limited is AFFIRMED. The petition in G.R. No. 159591 is GRANTED. The Decision of the Court of Appeals, dated August 14, 2003, in CA-G.R. SP No. 75756 dismissing the petition for certiorari of the HSBC International Trustee Limited is REVERSED and SET ASIDE. The Regional Trial Court, Branch 44, Bacolod City is declared without jurisdiction to take cognizance of Civil Case No. 01-11372 against the HSBC International Trustee Limited, and all its orders and issuances with respect to the latter are hereby ANNULLED and SET ASIDE. The said Regional Trial Court is hereby ORDERED to DESIST from maintaining further proceedings against the HSBC International Trustee Limited in the case aforestated.