GR 186738; (September, 2010) (Digest)
G.R. No. 186738; September 27, 2010
PRUDENTIAL BANK AND TRUST COMPANY (now BANK OF THE PHILIPPINE ISLANDS), Petitioner, vs. LIWAYWAY ABASOLO, Respondent.
FACTS
Respondent Liwayway Abasolo, as attorney-in-fact for the heirs of Leonor Valenzuela-Rosales, agreed to sell two parcels of land to Corazon Marasigan for ₱2,448,960. As Marasigan lacked funds, they proposed to mortgage the properties to petitioner Prudential Bank and Trust Company (PBTC), with the loan proceeds to be paid directly to Abasolo. Allegedly upon the advice of PBTC employee Norberto Mendiola, Abasolo executed a Deed of Absolute Sale transferring the titles to Marasigan to facilitate the loan, with Mendiola assuring her the proceeds would be released directly to her. Marasigan’s loan was approved and a real estate mortgage was constituted.
PBTC released the loan proceeds to Marasigan, the registered owner, as there was no written request for direct payment to a third party. Marasigan failed to fully pay Abasolo, who later accepted partial payment in vehicles. Abasolo filed a complaint for collection and annulment against Marasigan and PBTC. The Regional Trial Court held Marasigan primarily liable and PBTC subsidiarily liable, finding the bank breached an obligation to Abasolo. The Court of Appeals affirmed but deleted PBTC’s subsidiary liability.
ISSUE
Whether petitioner PBTC is subsidiarily liable to respondent Abasolo for the unpaid purchase price of the properties.
RULING
No. The Supreme Court affirmed the Court of Appeals’ deletion of PBTC’s subsidiary liability. The legal logic is anchored on the absence of a contractual relationship, the Statute of Frauds, and the nature of banking transactions. First, no privity of contract existed between Abasolo and PBTC. The bank’s transaction was solely a loan and mortgage agreement with its client, Marasigan. Any alleged assurance by Mendiola was not a bank guarantee but an unofficial verbal suggestion, and no written request for direct payment to Abasolo was submitted as required by bank procedure.
Second, the alleged promise or guarantee by Mendiola, being a representation concerning a credit transaction, falls under the Statute of Frauds, which requires such agreements to be in writing to be enforceable. The alleged oral assurance is unenforceable. Third, PBTC acted in good faith and within standard banking practice by releasing the loan proceeds to its borrower, Marasigan, the registered owner of the mortgaged properties. The bank had no legal duty to ensure Marasigan used the funds to pay Abasolo. The primary obligation to pay the purchase price remained solely with Marasigan. Thus, PBTC incurred no subsidiary liability.