Dao Heng Bank v. Sps. Lilia

Summary

This Supreme Court case involved a dispute over an alleged verbal dacion en pago agreement between Dao Heng Bank and Spouses Laigo to settle P11 million in mortgage debt by delivering property instead of money. When spouses defaulted, they claimed a verbal agreement existed to cede one mortgaged property as full payment. The bank denied this and proceeded with foreclosure, selling both properties for P10,776,242. The RTC dismissed spouses' annulment complaint for lack of written agreement required by Statute of Frauds. The CA reversed, finding partial performance through property appraisal. The Supreme Court ultimately reinstated the dismissal, ruling no perfected dacion en pago existed due to absence of meeting of minds and bank's approval. The Court emphasized that dacion en pago requires common consent and that commissioning an appraisal does not constitute agreement to the proposed settlement arrangement.