Allied Banking Corporation v. Cristina B. Fukuoka

Summary

Allied Banking Corporation and Ernesto Pascual challenged the Court of Appeals decision requiring reformation of a Real Estate Mortgage contract. Cristina Fukuoka sought to remove provisions making her liable for Crisostomo Borillo's loans beyond the P1 million she allegedly borrowed. The Supreme Court found that despite the mortgage being executed in Crisostomo's name, the true intention was to grant a loan to Fukuoka, evidenced by the Credit Ticket issued in her name and consistent monthly payment deductions. The Court applied Article 1359 of the Civil Code on contract reformation due to fraud and mistake, finding that Allied Bank's employees fraudulently inserted language making Fukuoka liable for all of Crisostomo's obligations. The decision affirmed the lower courts' ruling with modification, reinstating Allied Bank's cross-claim against Crisostomo for separate proceedings.