G.R. No. 190755 - Land Bank of the Philippines vs. Ong

The case involves an appeal from the Court of Appeals' decision affirming the Regional Trial Court's ruling.
The dispute centers on a loan agreement between Land Bank of the Philippines and the spouses Sy, which was later complicated by Alfredo Ong's attempt to assume the mortgage.

The spouses Sy secured a PhP16 million loan from Land Bank, secured by various properties.
Due to financial difficulties, they sold three mortgaged lots to Alfredo Ong for PhP150,000, with an assumption of the mortgage.
Alfredo was informed by Land Bank that his assumption of the mortgage was valid, and he paid PhP750,000 as part of the process.
Alfredo later discovered that his application for the assumption was denied, and Land Bank foreclosed on the properties without notifying him.

The Regional Trial Court ruled that the assumption of mortgage was not perfected due to the bank's failure to inform Alfredo of the disapproval.
The court ordered Land Bank to return the PhP750,000 with interest and awarded Alfredo attorney's fees.

The Court of Appeals upheld the trial court's decision, stating that Alfredo's payment was for the assumption of the mortgage, not for the Sy spouses' arrears.
The appellate court found that the actions of both Alfredo and Land Bank indicated a novation of the agreement.

The primary issues included whether Alfredo should have sought recourse against the Sy spouses, whether novation occurred, and the appropriateness of the awarded attorney's fees.

The Supreme Court agreed with Land Bank that Alfredo should have sought recourse against the Sy spouses but clarified that Alfredo's payment was conditional for his interest in the mortgage.
The court concluded that Alfredo did not have an interest in the Sy spouses' obligation, as his payment was made to secure his own interest.

The Supreme Court disagreed with the appellate court's finding of novation, stating that not all elements of novation were present.
The court emphasized that Land Bank did not consent to the substitution of debtors, which is necessary for novation.

The court ruled that Land Bank was liable for unjust enrichment, as it accepted Alfredo's payment without a valid basis for retaining it.
The elements of estoppel were met, as Land Bank misled Alfredo into believing he was recognized as a debtor.

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