Vices of Consent

Rural Bank of Caloocan, Inc. vs. Court of Appeals

G.R No. L-32116; April 21, 1981
PONENTE: DE CASTRO, J.

Facts:

This is a petition for review by way of certiorari of the decision of the Court of Appeals in
CA-G.R. No. 39760-R entitled “Maxima Castro, plaintiff-appellee, versus Severino Valencia, et
al., defendants; Rural Bank of Caloocan, Inc., Jose Desiderio, Jr. and Arsenio Reyes,
defendants-appellants,” which affirmed in toto decision of the Court of First Instance of Manila in
favor of plaintiff-appellee, the herein private respondent Maxima Castro.

Maxima Castro, joined by Severino Valencia, went to Rural Bank of Caloocan to apply
for mechanical advance. The credit was gotten by a land contract on Castor's home, from that
point onward, the bank endorsed the advance of P3000. Valencia acquired from the bank an
equivalent measure of advance fastening Castro's signature as co-producer without its
information. The sheriff at that point sent a notification declaring the property would be sold at
public sale to fulfill the commitment. Upon demand, the sale deal which was booked for March
10, 1961was delayed for April 10, 1961. Yet, April 10 was along these lines announced an
exceptional occasion so the sheriff sold the property on open closeout on April 11, 1961 which
was the following succeeding work day following the uncommon occasion. Castro appealed to
God for the invalidation of offer claiming that there was misrepresentation with respect to
Valencias who instigated her to sign as co-creator of a promissory note since she is a 70-year
old widow who can't peruse and compose and it was just when she get the notification of sheriff,
she discovered that the encumbrance on her property was P6000 and not for P3000.

Issue(s):

Is the promissory note executed by Mrs. Castro is valid or not?

Rulings:

Yes. Supreme court declare the promissory note valid between the bank and Castro and
the mortgage contract binding on Castro beyond the amount of P3,000.00 for while contracts
may not be in may not be invalidated insofar as they affect the bank and Castro on the ground
of fraud because the bank was not a participant thereto suc may however be invalidated on the
ground of substantial mistake mutually committed bt them as a consequence of the fraud and
misrepresentation inflicted by the Valencias.

It is battled that the consignation was made without earlier offer or delicate of installment
to the Bank, and is subsequently, not substantial. In holding that there is a significant
consistence with the arrangement of Article 1256 of the Civil Code, respondent court considered
the way that the Bank was expecting Castro to take responsibility for the amount of P6,000.00 in
addition to 12% premium per annum, while the sum relegated was just P3,000.00 in addition to
12%interest; that at the hour of consignation, the Bank had since a long time ago dispossessed
the home loan extra-judicially and the offer of the home loan property had effectively been
booked for April 10, 1961for non-installment of the commitment, and that in spite of the way that
the Bank definitely knew about the store made by Castro on the grounds that the receipt of the
store was appended to the record of the case, said Bank had not set aside any case of such
installment, and that subsequently Castro was directly in reasoning that it was vain and futile for
her to make past offer and delicate of installment straightforwardly to the Bank just in the
aforementioned measure of P3,000.00 in addition to 12% premium. Under the prior conditions,
the consignation made by Castro was substantial, if not under the severe arrangement of the
law, under the more liberal contemplations of value.

WHEREFORE, finding no reversible error in the judgment under review, We affirm the
same in toto.
No pronouncement as to cost.
SO ORDERED.