Manuel Go Cinco v. Court of Appeals

Summary

The Supreme Court ruled on a dispute between spouses Manuel and Araceli Go Cinco and Maasin Traders Lending Corporation (MTLC) regarding payment of a commercial loan. The spouses sought to pay their MTLC loan using proceeds from a Philippine National Bank loan, authorizing MTLC's president Ester Servacio to collect the proceeds via Special Power of Attorney. Servacio refused to execute the required mortgage release and collect the proceeds, leading MTLC to institute foreclosure proceedings. The RTC favored the spouses, the CA reversed, but the Supreme Court ultimately ruled for the spouses. The Court found Servacio's refusal unjustified, constituting abuse of rights under Article 19 of the Civil Code. While the refusal did not constitute actual payment requiring tender and consignation under Article 1256, the Court held the spouses had established legitimate means of payment that was wrongfully prevented. The decision ordered acceptance of the PNB proceeds, consent to mortgage release, and awarded reduced damages while deleting speculative profit claims. This case establishes important precedent on creditors' duty to act in good faith when debtors attempt legitimate payment through alternative means.