- Petitioner
- Herman C. Crystal
- Respondent
- Bank of the Philippine Islands
- Citation
- G.R. No. 172428
- Court
- Supreme Court
- Division
- Second Division
- Ponente
- Tinga, J.
- Decided
- November 28, 2008
Summary
The Supreme Court ruled that heirs of deceased spouses who executed loan agreements with joint and several liability are bound by solidary obligations and cannot escape liability through third-party payment offers. The spouses Raymundo and Desamparados Crystal obtained loans for Cebu Contractors Consortium Co. and bound themselves as sureties with joint and several liability. When CCCC defaulted, BPI validly foreclosed on both chattel and real estate mortgages. The Court held that Insular Bank of Asia and America's offer to pay the debt was properly rejected as creditors are not required to accept payment from third parties under Article 1236 of the Civil Code. The heirs' claim that foreclosure was illegal because they were mere guarantors was rejected since they explicitly agreed to solidary liability, making them directly and equally bound with the principal debtor. While the Court deleted moral damages awarded to BPI (as corporations cannot experience wounded feelings), it upheld exemplary damages and attorney's fees for the heirs' bad faith litigation.