Prudential Bank v. Liwayway Abasolo

Summary

Liwayway Abasolo sued Prudential Bank for subsidiary liability after the bank's employee allegedly promised that loan proceeds from Corazon Marasigan's mortgage would be paid directly to her as seller of the mortgaged properties. The RTC and Court of Appeals held the bank subsidiarily liable based on the employee's representations. However, the Supreme Court reversed, applying the principle of relativity of contracts under Article 1311 of the Civil Code. The Court ruled that absent a lender-borrower relationship between the bank and Abasolo, there was no inherent obligation to release proceeds to her. A clear and deliberate act of conferring favor upon a third person must be present, preferably through written documentation, which was lacking. The Court found no evidence of fraud or collusion, dismissing the complaint against the bank and limiting liability to the actual buyer Corazon Marasigan.