G.R. No. 27020 , September 19, 1927
ASIA BANKING CORPORATION, plaintiff-appellee, vs. M. J. MCCUENE, ET AL., defendants. A. W. YEARSLEY, appellant.

FACTS

Asia Banking Corporation sued the defendants, M. J. McCuene and A. W. Yearsley, as partners of “Subway Sales Co.,” to recover on ten promissory notes executed by them in favor of E. E. Elser and later endorsed to the bank. Defendant Yearsley filed an amended answer with a counterclaim, alleging that the bank, through duress and threats while he was ill, obtained multiple chattel mortgages on his property (including consigned merchandise) to secure his pre-existing debt. He claimed the bank arbitrarily held and controlled his stock, preventing him from selling it to pay his debt, causing him losses. He further alleged that after a series of payments, a full settlement was reached, the debt was paid, and the bank returned all securities. He sought damages of over ₱19,000 for the bank’s alleged oppressive conduct. The trial court ruled in favor of the bank, ordering payment on the notes, and dismissed the counterclaim.

ISSUE

Whether the defendant Yearsley is entitled to damages on his counterclaim based on the alleged arbitrary and oppressive acts of the bank in securing and handling the chattel mortgages.

RULING

No. The Supreme Court affirmed the trial court’s judgment in favor of the bank. The Court held that Yearsley, by his own admission and testimony, had engaged in a full and complete settlement and accounting with the bank regarding all matters complained of in his counterclaim. By doing so, he ratified and approved the bank’s actions. The Court found no evidence to support the allegations of duress or arbitrary conduct. The bank’s actions were merely ordinary steps to secure an existing debt. Therefore, the counterclaim for damages lacked merit. The bank was entitled to recover on the promissory notes.