681

VOL. 189, SEPTEMBER 18, 1990 681

Philippine National Bank vs. Intermediate Appellate Court

680 SUPREME COURT REPORTS ANNOTATED
Philippine National Bank vs. Intermediate Appellate Court
Attorney to mortgage his property should appear in a public
* instrument: x x x nevertheless, a revocation embodied in a private
G.R. No. 66715. September 18, 1990. writing is valid and binding between the parties (Doliendo v.
Depino, 12 Phil. 758; Hawaiian-Philippines Co. vs. Hernaez, 45
PHILIPPINE NATIONAL BANK, petitioner, vs. THE Phil. 746) for—“The legalization by a public writing and the
HONORABLE INTERMEDIATE APPELLATE COURT recording of the same in the registry are not essential requisites
(First Civil Cases Division) and ROMEO ALCEDO, of a contract entered into, as between the parties, but mere
respondents. conditions of form or solemnities which the law imposes in order
that such contract may be valid as against third persons, and to
Civil Law; Estoppel; A party may not go back on his own acts insure that a publicly executed and recorded agreement shall be
and representations to the prejudice of the other party who relied respected by the latter.” (Alano, et al. vs. Babasa, 10 Phil. 511.)
upon them.—We agree with the opinion of the appellate court that
PETITION for certiorari to review the decision and
under the doctrine of promissory estoppel enunciated in the case
resolution of the then Intermediate Appellate Court.
of Republic Flour Mills, Inc. vs. Central Bank, L-23542, August
11, 1979, the act and assurance given by the PNB to Alcedo “that
The facts are stated in the opinion of the Court.
we shall exclude the aforementioned lot [Lot No. 1402] as a
     Juan D. Diaz, Benjamin C. Del Rosario and Pedro R.
collateral of Leticia de la VinaSepe in our recommendation for her
Lazo for petitioner.
1971-72 sugar crop loan” (p. 37, Rollo) is binding on the bank.
     Carlos S. Ayeng, Augustus C. Rallos and Orlando S.
Having given that assurance, the bank may not turn around and
Ayeng for private respondent.
do the exact opposite of what it said it would not do. One may not
take inconsistent positions (Republic vs. Court of Appeals, 133 GRIÑO-AQUINO, J.:
SCRA 505). A party may not go back on his own acts and
representations to the prejudice of the other party who relied This is a petition for certiorari which seeks to set aside: (a)
upon them (Lazo vs. Republic Surety & Insurance Co., Inc., 31 the decision dated November 29, 1983 of the Intermediate
SCRA 329.) Appellate Court (now Court of Appeals) in CA-G.R. CV No.
Same; Agency; Special Power of Attorney; The revocation of a 68021 which affirmed the decision of the Court of First
special power of attorney, although embodied in a private writing, Instance of Negros Occidental (now Regional Trial Court),
is valid and binding between the parties.—While Article 1358 of Branch IV, Bacolod City, in Civil Case No. 11393; and (b)
the New Civil Code requires that the revocation of Alcedo’s respondent court’s resolution dated February 29, 1984
Special Power of denying petitioner Philip-pine National Bank’s (PNB for
short) motion for reconsideration.
The facts of the case are the following:
_______________ On March 20, 1968, Leticia de la Vina-Sepe executed a
real estate mortgage in favor of PNB, San Carlos Branch,
* FIRST DIVISION.
over a lot registered in her name under TCT No. T-31913 to
secure the payment of a sugar crop loan of P3,400. Later, Leticia de la Vina-Sepe, which she had already availed
Leticia Sepe, acting as attorney-in-fact for her brother-in- of. In view of your late request, please be advised and
law, private respondent Romeo Alcedo, executed an assured that we shall exclude the aforementioned lot
amended real estate mortgage to include his (Alcedo’s) Lot as a collateral of Leticia de la Vina-Sepe in our
No. 1626 (being a portion of Lot No. 1402, covered by TCT recommendation for her 1971-72 sugar crop loan.
52705 of the Isabela Cadastre) as additional collateral for “For your information, we enclose a copy of our
Sepe’s increased loan of P16,500 (pp. 5- letter to Mrs. Sepe, which is self-explanatory.
“Thank you.
682
“Very truly yours,
“(Sgd.) JOSE T. GELLEGANI
682 SUPREME COURT REPORTS ANNOTATED “Manager”
Philippine National Bank vs. Intermediate Appellate Court 683

6, PNB’s Brief, p. 74, Rollo). Leticia Sepe and private

VOL. 189, SEPTEMBER 18, 1990 683
respondent Alcedo verbally agreed to split fifty-fifty (50-50)
the proceeds of the loan (p. 94, Rollo) but failing to receive Philippine National Bank vs. Intermediate Appellate
his one-half share from her, Alcedo wrote a letter on May Court
12, 1970 to the PNB, San Carlos Branch, revoking the
Special Power of Attorney which he had given to Leticia (pp. 6-7, Record on Appeal, p. 75, Rollo.)
Sepe to mortgage his Lot No. 1626 (p. 95, Rollo).
Replying on May 22, 1970, the PNB Branch Manager, On the same day, May 22, 1970, PNB advised Sepe in
Jose T. Gellegani, advised Alcedo that his land had already writing to replace Lot No. 1402 with another collateral of
been included as collateral for Sepe’s 1970-71 sugar crop equal or higher value.
loan, which the latter had already availed of, nevertheless,
he assured Alcedo that the bank would exclude his lot as “May 22, 1970
collateral for Sepe’s forthcoming (1971-72) sugar crop loan “Mrs. Leticia de la Vina-Sepe
Canla-on City

(p. 95, Rollo). The letter reads:

“Dear Mrs. Sepe:
“May 22, 1970 “We wish to advice you that Mr. Romeo Alcedo, in a
“Mr. Romeo Alcedo letter written to us, has plans to revoke the ‘Special
Mamballo, M. Padilla
Power of Attorney’ he executed in 1969 in your favor,
Negros Occidental
affecting Lot No. 1402, Isabela Cadastre, covered by
“Dear Mr. Alcedo: Transfer Certificate of Title No. 52705 with an area of
“This is to acknowledge receipt of your letter dated 20.9200 Hectares. Our record shows that this parcel of
May 12, 1970, requesting us to revoke the ‘Special land is mortgaged to us to secure the agricultural
Power of Attorney’ you have executed in favor of Mrs. sugar crop loans we have granted you.
Leticia de la Vina-Sepe, on February 18, 1969, on Lot “Mr. Alcedo made us understand that this said
No. 1402, Isabela Cadastre, covered by Transfer property shall serve as security for your 1969/70 sugar
Certificate of Title No. 52705, with an area of 20.9200 crop loan only. As it already secures your 1970-71 crop
hectares. loan, which you have already availed, the same may be
“In this connection, we wish to advise you that the excluded as security for future crop loans. In the
aforementioned parcel of land had been included as meantime, it is requested that you replace Lot No.
collateral to secure the 1970-71 sugar crop loan of Mrs. 1402, above-mentioned, with the same or more
appraised value.
 “Kindly call on us regarding this matter at your share (amounting to P28,319.34) out of the proceeds of the
earliest convenience. “Thank you. sugar crop loans obtained by Sepe (p. 34, Rollo).
“Very truly yours, In its answer, PNB alleged that it had no knowledge of
“(Sgd.) JOSE T. GELLEGANI the agreement between Mrs. Sepe and Alcedo to split the
“Manager” crop loan proceeds between them. It required Sepe to put
(pp. 7-8, Record on Appeal, p. 75, Rollo.) up other collaterals when it granted her an additional loan
because Alcedo informed the Bank that he was revoking
Despite the above advice from PNB, Sepe was still able to the Special Power of Attorney he gave Sepe; that the
obtain an additional loan from PNB increasing her debt of revocation was not formalized in accordance with law; and
P16,500 to P56,638.69 on the security of Alcedo’s property that in any event, the revocation of the Special Power of
as collateral. On January 15, 1974, Alcedo received two (2) Attorney on May 12, 1970 by Alcedo did not impair the real
letters from PNB: (1) informing him of Sepe’s failure to pay estate mortgage earlier executed on April 28, 1969 by Sepe
her loan in the total amount of P56,638.69; and (2) giving in favor of the Bank (p. 36, Rollo).
him six (6) days to settle Sepe’s outstanding obligation, as On March 14, 1980, the trial court rendered judgment in
otherwise, foreclosure proceedings would be commenced favor of Alcedo—
against his property (p.
“1. Declaring the public auction sale and the certificate of sale
684 executed by the Provincial Sheriff of Negros Occidental
relative to Lot No. 1626, Isabela Cadastre (TCT No. T-
684 SUPREME COURT REPORTS ANNOTATED 52705), as null and void;
“2. Ordering the defendant Philippine National Bank to
Philippine National Bank vs. Intermediate Appellate Court
reconvey to plaintiff the title to aforesaid Lot No. 1626 free
from all liens and encumbrances relative to the loans
33, Rollo). Alcedo requested Sepe to pay her accounts to obtained by defendant Leticia
forestall foreclosure proceedings against his property, but
to no avail (p. 15, Rollo). 685
On April 17, 1974, Alcedo sued Sepe and PNB in the
Court of First Instance of Negros Occidental for collection
and injunction with damages (p. 33, Rollo). VOL. 189, SEPTEMBER 18, 1990 685
During the pendency of the case, PNB filed in the Office Philippine National Bank vs. Intermediate Appellate Court
of the Sheriff at Pasig, Metro Manila, a petition for
extrajudicial foreclosure of its real estate mortgage on de la Vina-Sepe;
Alcedo’s land. On November 19, 1974, the property was “3. Ordering defendant spouses Leticia de la Vina-Sepe and
sold to PNB as the highest bidder in the sale. The Elias Sepe and the Philippine National Bank, in solidum,
corresponding Sheriff’s Certificate of Sale was issued to the to pay to the plaintiff moral damages in the sum of
Bank (p. 33, Rollo). P10,000.00, and another sum of P5,000.00 as attorney’s
On October 18, 1975, Alcedo filed an amended complaint fees and expenses of litigation;
against Leticia and her husband Elias Sepe, and the “4. On the cross-claim of defendant PNB against Leticia de la
Provincial Sheriff of Negros Occidental praying Vina-Sepe, considering that no evidence has been adduced
additionally for annulment of the extrajudicial foreclosure regarding the updated actual accountability of the latter
sale and reconveyance of the land to him free from liens with the former, it is hereby directed that PNB proceed to
and encumbrances, with damages. collect against the cross-defendant whatever outstanding
With leave of court, Alcedo filed a second amended obligation the latter owes the former arising from
complaint withdrawing his action to collect his one-half transactions in connection with the instant case.
 “No pronouncement as to costs.” (pp. 10-11, Rollo.) bank under the principle of estoppel by deed and defined as
follows:
The bank appealed but to no avail for on November 29,
1983, the Intermediate Appellate Court affirmed intoto the “‘A doctrine in American jurisprudence whereby a party creating an
judgment of the trial court (p. 54, Rollo.) The appellate appearance of fact which is not true is held bound by that appearance as
court reasoned out that the Bank was estopped from against another person who has acted on the faith of it. (Strong v.
foreclosing the mortgage on Alcedo’s lot to pay Sepe’s 1971- Gutierrez Repide, 6 Phil. 685).
72 sugar crop loan, after having assured Alcedo on May 22,
which is provided for in Articles 1431 and 1433 of the New
1970 “that we shall exclude the aforementioned lot as a
Civil Code in conjunction with Section 3, paragraph (a), Rule 131
collateral of Leticia de la Vina-Sepe in our recommendation
of the Rules of Court, all of which provide:
for her 1971-72 sugar crop loan” (p. 37, Rollo). The Court of
Appeals held: “‘Art.1431. Through estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved
“x x x Plaintiff-appellee’s letter was unequivocal and clear to the
as against the person relying thereon.’
effect that defendant Leticia de la Vina Sepe was no longer
“‘Art.1433. Estoppel may be in pais or by deed.’
empowered to bind, encumber or mortgage his property. Although
“‘Sec.3. Conclusive presumptions.—The following are instances of
We may not hold this revocation to retroact to April 28, 1969
conclusive presumptions:
which was the date of the original mortgage, We can neither
interpret it in any other way than that from the moment of notice “‘(a) Whenever a party has, by his own declaration, act, or omission,
to the PNB, it was the absolute intention of the owner to intentionally and deliberately led another to believe a particular
withdraw all authority from said defendant to further bind or thing true, and to act upon such belief, he cannot, in any
encumber his property. This was clearly understood by the litigation arising out of such declaration, act, or omission, be
defendant-appellant PNB. There was no question on its part that permitted to falsify it.’
Leticia de la Vina Sepe was no longer authorized to offer plaintiff-
appellee’s property as collateral for her contract of mortgage with and which was enunciated in the following decisions of the
the PNB. Defendant-appellant, therefore, acknowledged this Supreme Court:
revocation of the agency and in no uncertain terms assured the
“‘Whenever a party has, by his own declaration, act or omission
plaintiff-appellee that indeed, the latter’s property will no longer
intentionally and deliberately led another to believe a particular thing
be accepted by it as collateral for the sugar crop loan of the
true and to act upon such belief, he cannot, in any litigation arising out of
aforementioned defendant for the year 1971 to 1972. This meeting
such declaration, act, or omission, be permitted to falsify it.
of the minds between the plaintiff-appellee and defendant-
“‘Estoppel arises when one, by his acts, representations, or admissions,
appellant took place not through verbal communications only, but
or by his silence when he ought to speak out, intentionally or through
in writing, as shown by their letters dated May 12, 1970 and May
culpable negligence induces another to believe certain facts to exist and
22, 1970, respectively. x x x.
such other rightfully relies and acts on such belief, so that he will be
686 prejudiced if the former is permitted to deny the existence of such facts
(Huyatid v. Huyatid, 47265-R, Jan. 4, 1978).
“‘The doctrine of estoppel is based upon the grounds of public policy,
686 SUPREMECOURT REPORTS ANNOTATED fair dealing, good faith and justice, and its purpose is to forbid one to
Philippine National Bank vs. Intermediate Appellate Court speak against his own act, representations, or commitments to the injury
of one to whom they were directed and who reasonably relied thereon.
"xxx      xxx      xxx Said doctrine springs from
“x x x To Our minds, the aforementioned act and declaration of
687
defendant-appellant PNB as embodied in said letter binds said
 VOL. 189, SEPTEMBER 18, 1990 687 case of Republic Flour Mills, Inc. vs. Central Bank, L-
Philippine National Bank vs. Intermediate Appellate Court 23542, August 11, 1979, the act and assurance given by the
PNB to Alcedo “that we shall exclude the aforementioned
equitable principles and the equities of the case. It is designed to aid the lot [Lot No. 1402] as a collateral of Leticia de la Vina-Sepe
law in the administration of justice where without its aid injustice might in our recommendation for her 1971-72 sugar crop loan” (p.
result.’ (Philippine National Bank v. Court of Appeals, L-30831, 37, Rollo) is binding on the bank. Having given that
November 21, 1979, 94 SCRA 368) assurance, the bank may not turn

“By its letter dated May 22, 1970, defendant-appellant PNB led 688
plaintiff-appellee to believe that his property covered by TCT T-
52705 would no longer be included as collateral in the sugar crop 688 SUPREME COURT REPORTS ANNOTATED
loan of defendant Leticia de la Vina Sepe for the year 1971-72. It
led said plaintiff-appellee to believe that his property as of said Philippine National Bank vs. Intermediate Appellate Court
year will no longer be encumbered and will be free from any lien
or mortgage. Plaintiff-appellee had the right to rely on said belief, around and do the exact opposite of what it said it would
because of the aforementioned act and declaration of defendant- not do. One may not take inconsistent positions (Republic
appellant bank. Under the laws and jurisprudence aforequoted, vs. Court of Appeals, 133 SCRA 505). A party may not go
defendant-appellant bank can no longer be allowed to deny or back on his own acts and representations to the prejudice
falsify its act or declaration, or to renege from it. This is one of the of the other party who relied upon them (Lazo vs. Republic
conclusive presumptions provided for by the Rules of Court.” (pp. Surety & Insurance Co., Inc., 31 SCRA 329.)
37, 38-39, Rollo.) In the case of Philippine National Bank vs. Court of
Appeals (94 SCRA 357), where the bank manager assured
PNB seeks a review of that decision on the grounds that: the heirs of the debtor-mortgagor that they would be
allowed to pay the remaining obligation of their deceased
1. the doctrine of promissory estoppel does not apply parents, the Supreme Court held that the bank must abide
to this case; by its representations.
2. PNB was a mortgagee in good faith and for value;
and “On equitable principles, particularly on the ground of estoppel,
we must rule against petitioner Bank. The doctrine of estoppel is
3. PNB adduced substantial evidence in support of its
based upon the grounds of public policy, fair dealing, good faith
cross-claim against defendant Leticia Sepe (p. 15,
and justice, and its purpose is to forbid one to speak against its
Rollo).
own act, representations, or commitments to the injury of one to
whom they were directed and who reasonably relied thereon. The
These issues boil down to whether or not PNB validly
doctrine of estoppel springs from equitable principles and the
foreclosed the real estate mortgage on Alcedo’s property
equities in the case. It is designed to aid the law in the
despite notice of Alcedo’s revocation of the Special Power of
administration of justice where without its aid injustice might
Attorney authorizing Leticia Sepe to mortgage his property
result. It has been applied by this Court wherever and whenever
as security for her sugar crop loans and despite the Bank’s
the special circumstances of a case so demands.”
written assurance to Alcedo that it would exclude his
property as collateral for Sepe’s future loan obligations. In the case at bar, since PNB had promised to exclude
After careful deliberation, the Court is not persuaded to Alcedo’s property as collateral for Sepe’s 1971-72 sugar
disturb the decisions of the trial court and the Court of crop loan, it should have released the property to Alcedo.
Appeals in this case. The mortgage which Sepe gave to the bank on Alcedo’s lot
We agree with the opinion of the appellate court that as collateral for her 1971-72 sugar crop loan was null and
under the doctrine of promissory estoppel enunciated in the void for having been already disauthorized by Alcedo. Since
Alcedo’s property secured only P13,100.00 of Sepe’s 1970-71           Narvasa (Actg. C.J.), Cruz, Gancayco and Medialdea,
sugar crop loan of P16,500.00 (because P3,400 was secured JJ., concur.
by Sepe’s own property), Alcedo’s property may be held to
answer for only the unpaid balance, if any, of Sepe’s 1970- Petition denied.
71 loan, but not the 1971-72 crop loan.
Note.—A party cannot adopt inconsistent positions, i.e.,
While Article 1358 of the New Civil Code requires that
by authorizing an obligor to look for buyer to obtain a
the revocation of Alcedo’s Special Power of Attorney to
better price for property subject of execution sale, and then
mortgage his property should appear in a public
after such recourse is perfected, urging that the private
instrument:
sale be annulled because the price was too low. (Republic
“Art.1358. The following must appear in a public document: vs. Court of Appeals, 133 SCRA 505.)
(1) Acts or contracts which have for their object the creation,
———o0o———
689
690

VOL. 189, SEPTEMBER 18, 1990 689

Philippine National Bank vs. Intermediate Appellate Court

transmission, modification or extinguishment of real rights over

immovable property; sales of real property or of an interest
therein are governed by Articles 1403, No. 2 and 1405.”
© Copyright 2021 Central Book Supply, Inc. All rights reserved.
nevertheless, a revocation embodied in a private writing is
valid and binding between the parties (Doliendo v. Depino,
12 Phil. 758; Hawaiian-Philippines Co. vs. Hernaez, 45
Phil. 746) for—

“The legalization by a public writing and the recording of thesame

in the registry are not essential requisites of a contract
enteredinto, as between the parties, but mere conditions of form
or solemnities which the law imposes in order that such contract
may be valid asagainst third persons, and to insure that a
publicly executed andrecorded agreement shall be respected by
the latter.” (Alano, et al. vs.Babasa, 10 Phil. 511.)

The PNB acted with bad faith in proceeding against

Alcedo’s property to satisfy Sepe’s unpaid 1971-72 sugar
crop loan. The extrajudicial foreclosure being null and void
abinitio, the certificate of sale which the Sheriff delivered
to PNB as the highest bidder at the sale is also null and
void.
WHEREFORE, finding no reversible error in the
decision of the Court of Appeals, the petition for review is
denied for lack of merit.
SO ORDERED.