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Premiere Development Bank Vs

The Supreme Court ruled in favor of Spouses Engracio T. Castañeda and Lourdes E. Castañeda, determining that Premiere Development Bank improperly applied their personal loan payment to corporate loans, as the spouses were not debtors of the corporations. The court ordered the bank to accept the payment as full settlement of the personal loan and awarded the spouses moral and exemplary damages, along with attorney's fees. Additionally, the bank's actions were deemed to be in bad faith, prolonging the legal process for the spouses over 23 years.

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14 views2 pages

Premiere Development Bank Vs

The Supreme Court ruled in favor of Spouses Engracio T. Castañeda and Lourdes E. Castañeda, determining that Premiere Development Bank improperly applied their personal loan payment to corporate loans, as the spouses were not debtors of the corporations. The court ordered the bank to accept the payment as full settlement of the personal loan and awarded the spouses moral and exemplary damages, along with attorney's fees. Additionally, the bank's actions were deemed to be in bad faith, prolonging the legal process for the spouses over 23 years.

Uploaded by

wolfaire12
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Premiere Development Bank vs. Spouses Engracio T. Castañeda and Lourdes E.

Castañeda
G.R. No. 185110. August 19, 2024

Facts:
 This case involves a person who is both a principal debtor of a personal loan and a surety
of a corporate loans of the same creditor.
 On January 31, 2005, RTC Branch 149, Makati City denied Premiere Development Bank’s
Petition
 On October 20, 2008, the Court of Appeals affirmed the decision
 Spouses Castañeda took out a PHP2.6 million personal loan from the Bank.
 The maturity date of the personal loan was on September 10, 2000.
 Two companies, Casent Realty and Development Corp. and Central Surety and Insurance
Company Inc. (Central Surety), where Engracio held prominent roles, had a combined
corporate loan of PHP86.8 million.
 As collateral, Engracio assigned and pledged a proprietary share in the Manila Polo Club
(MPC), identified as Proprietary Membership Certificate No. 170, to Premiere Development
Bank. This certificate was registered under the name of his brother, Constancio T.
Castañeda Jr.
 On September 20, 2000, the spouses submitted two checks: one for PHP2.6 million to
settle their personal loan in full, and another for PHP6 million for Central Surety’s
corporate loan.
 When the spouses paid PHP2.6 million for their personal loan and P6 million for one of the
corporate loans, the Bank applied the payment to all 4 loans.
 The Castañeda spouse challenged the bank’s action, arguing that their personal loan
payment should not have been applied to corporate loans.
 Premiere Development Bank argued that the right to choose which debt to apply payment.

Issue:
 Whether or not Premiere Development Bank has the right to choose which debt to apply
payment belongs to it because the case falls under the exception on application of
payment provided for in Article 1252.
 Whether or not a portion of the Php 2.6 million check given by Spouses Castañeda as
complete payment for their loan and its collateral pledge MPC Certificate No. 170, can be
applied by PDB to the corporate loans of Casent Realty and Central Surety.
 Whether or not Premiere Development Bank acted in good faith.

Ruling:
 No. In order for the provision to apply, there must be a single debtor with several loans.
The court ruled that the bank mistakenly treated the spouses and the companies as one
borrower, merging payments for separate. Spouses Castañeda’s are not the debtors in the
obligations of the corporations because corporations have separate and distinct juridical
personalities from its officers and stockholders.
 The Supreme Court denied the petition and ordered Premiere Development Bank to accept
the check tendered by Spouses Engracio T. Castañeda and Lourdes E. Castañeda as full
payment of their personal loan. Additionally, the court ordered Premiere Development
Bank to pay respondents Spouses Engracio T. Castañeda and Lourdes E. Castañeda moral
damages in the amount of Php 2,000,000.00 and exemplary damages amounting to
another Php 2,000,000.00 and an award of Php 50,000.00 for attorney’s fees.
 No. The court viewed Premiere Development Bank’s continued insistence on its
egregiously wrong position to be a clear act of bad faith that has compelled Spouses
Castañeda to unnecessarily undergo the travails of trial and the time-consuming appeal
process that, to date, totals already 23 very long years.
 The Bad faith of PDB becomes more manifest and oppressive when one considers that the
corporate loans of Central Surety and Casent Realty were sufficiently secured by separate
real estate mortgages and pledges.

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