Land Bank of the Philippines v. Alfredo Ong

Summary

Alfredo Ong paid PhP750,000 to Land Bank of the Philippines for assumption of mortgage from spouses Sy, who had sold mortgaged properties to Ong's family under a Deed of Sale with Assumption of Mortgage. Despite accepting the payment and providing requirements for assumption, Land Bank denied Ong's application based on adverse credit investigation but failed to notify him and proceeded to foreclose the original mortgagors' properties. When Land Bank refused to return the payment, Ong filed suit for recovery. The Supreme Court ruled that while Land Bank was not obligated to accept the assumption under Article 1236 of the Civil Code, it was estopped from retaining the payment due to its misleading conduct. Applying the principle of unjust enrichment under Article 22, the Court ordered Land Bank to return PhP750,000 with 6% interest and attorney's fees, emphasizing that banks must observe higher standards of diligence in public dealings.