Patricia Tan v. Planters Development Bank

Summary

Patricia Tan financed the title transfer costs for Spouses Abel's mortgaged property in exchange for Planters Development Bank's Letter of Guaranty promising to pay her P7,000,000 upon completion of title transfer and mortgage annotation. After Tan complied with the conditions and submitted the required documents, the bank refused payment claiming discovery of a cloud on the title due to allegations that the original owner died before executing the sale. The Supreme Court ruled in favor of Tan, applying the parole evidence rule to strictly interpret the Letter of Guaranty's terms. The Court found that Tan fulfilled the only two conditions specified: title transfer and mortgage annotation. The bank's acceptance of the submitted documents without qualification demonstrated compliance. The Court emphasized that banks cannot justify non-performance of contractual obligations by claiming post-agreement diligence, as such diligence should have been exercised before loan approval and contract execution.