Maxwell v. Yu (G.R. No. 179395; December 15, 2010)

FACTS: Maxwell obtained loans from BPI, in the total sum of P8.8M covered by two PN and secured by a real estate mortgage over two lots registered in Yu's name. Yu signed as Maxwells co-maker in the first PN covering the P8M loan. It appears that Yu did not sign as co-maker in the PN for P800,000. Maxwell defaulted in the payment of the loans, forcing Yu to pay BPI, through funds borrowed from his mother, Mina Yu, to prevent the foreclosure of his real properties.

Thereafter, Yu demanded reimbursement from Maxwell of the entire amount paid to BPI. However, Maxwell failed to reimburse Yu. Consequently, Yu filed with the trial court a complaint for sum of money and damages.

RTC ruled in favor of YU which was upheld by the CA.

ISSUE: Is Yu entitled to reimbursement from Maxwell for the loan payment made to BPI?

HELD: The question of whether Maxwell's transactions with BPI were accommodation loans for Yus benefit is clearly factual, and thus, beyond the Court's review. Factual findings of the trial court, when affirmed by the CA, will not be disturbed by this Court. As a rule, such findings by the lower courts are entitled to great weight and respect, and are deemed final and conclusive on this Court when supported by the evidence on record. The foregoing principle applies to the present controversy.

This issue in turn depends on whether the transactions with BPI were accommodation loans solely for Yu's benefit.

Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.

The above provision grants the Yu the right to recovery and creates an obligation on the part of the Maxwell to reimburse the plaintiff. In this case, Yu paid BPI the amount of the principal loans with interest, thereby extinguishing Maxwells loan obligation with BPI. Pursuant to Article 1236 of the Civil Code, Maxwell, which was indisputably benefited by Yu's payment, must reimburse Yu the same amount.