Estoppel

#43 IBAAN RURAL v. CA (1999)

Facts: Spouses Cesar and Leonila Reyes were the owners of 3 lots covered by TCTs in Lipa
City. The spouses mortgaged these lots to Ibaan Rural Bank, Inc.. With the knowledge and
consent of Ibaan, the spouses as sellers, and Mr. and Mrs. Tarnate [private respondents] as
buyers, entered into a Deed of Absolute Sale with Assumption of Mortgage of the lots in
question. The Tarnates failed to pay the loan and the bank extra-judicially foreclosed on the
mortgaged lots. The Sheriff conducted a public auction of the lots and awarded the lots to the
bank, the sole bidder. Sheriff issued a Certificate of Sale which was registered on October 16,
1979. The certificate stated that the redemption period expires 2 years from the registration of
the sale. No notice of the extrajudicial foreclosure was given to the private respondents.
Thereafter, the Tarnates offered to redeem the lots and tendered the redemption amount of
P77,737.45. However, Ibaan refused the redemption on the ground that it had consolidated its
titles over the lots. Sheriff also denied the redemption on the ground that private respondents
did not appear on the title to be the owners of the lots.
The Tarnates filed a complaint to compel the bank to allow their redemption of the
foreclosed lots. They alleged that the extra-judicial foreclosure was null and void for lack of
valid notice and demand upon them, and that they were entitled to redeem the foreclosed lots
because they offered to redeem and tendered the redemption price before the deadline of the 2-
year redemption period.
The bank opposed the redemption, contending that the private respondents had no right to
redeem the lots because they were not the real parties in interest; that at the time they offered
to redeem, the right to redeem had prescribed, as more than one year had elapsed from the
registration of the Certificate of Sale; that there was no need of personal notice to them because
under Section 3 of Act 3135, only the posting of notice of sale at three public places of the
municipality where the properties are located was required.
Issue/s: Whether or not the redemption period has expired

Held: Yes, it has expired. For 2 years, it did not object to the stipulated 2-year redemption
period provided in the Cetificate of Sale. Thus, it could be said that petitioner consented to the
two-year redemption period specially since it had time to object and did not.
When circumstances imply a duty to speak on the part of the person for whom an obligation is
proposed, his silence can be construed as consent. By its silence and inaction, petitioner misled
private respondents to believe that they had two years within which to redeem the mortgage.
After the lapse of 2 years, petitioner is estopped from asserting that the period for redemption
was only one year and that the period had already lapsed. Estoppel in pais arises when one, by
his acts, representations or admissions, or by his own silence when he ought to speak out,
intentionally or through culpable negligence, induces another to believe certain facts to exist and
such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is
permitted to deny the existence of such facts.
SPILL: In this case, there was no voluntary agreement between the parties to extend the
redemption period to 2 years. Sheriff unilaterally extended the period to 2 years in the
certificate. The parties were not even privy to the extension made by the sheriff. The bank can
not after the lapse of 2 years insist that the redemption period was one year only. The rule on
redemption is liberally interpreted in favor of the original owner of a property. The fact alone
that he is allowed the right to redeem clearly demonstrates the solicitousness of the law in

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Estoppel

giving him another opportunity, should his fortune improve, to recover his lost property. Lastly,
petitioner is a banking institution on whom the public expects diligence, meticulousness and
mastery of its transactions. Had petitioner diligently reviewed the Certificate of Sale it could
have easily discovered that the period was extended one year beyond the usual period for
redemption. Banks, being greatly affected with public interest, are expected to exercise a
degree of diligence in the handling of its affairs higher than that expected of an ordinary
business firm.

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Estoppel

#44 METROBANK vs. CA

Facts:

Businessman Tomas Chia owns a the subject property (690 sq. m) located in Diliman,
QC. He offered it for sale to respondent G.T.P. Development Corporation, with assumption of
the mortgage indebtedness in favor of petitioner METROBANK secured by the subject property.
Pending negotiations, Atty. Atienza, acting in behalf of GTP, went to the METROBANK Quiapo
to inquire on the balance of the REM. Thereafter, the Deed of Sale and the Memorandum of
Agreement between Chia and GTP were eventually executed. 12 days later, the balance was
paid by Atty. Atienza and petitioner issued an official receipt acknowledging payment. However,
METROBANK refused to release the REM despite repeated requests from Atty. Atienza. This
prompted GTP to file an action for specific performance against petitioner METROBANK and
Mr. Chia. As answer, Chia denied having executed any deed of sale in favor of GTP involving
the subject property and METROBANK justified its non-release of the REM (1) upon the advise
of Chia of his non-execution of the sale, and (2) there are other loans incurred by Mr. Chia
which are also secured by the subject property. Judgment was rendered in favor of GTP. On
appeal, the CA reversed TC’s decision. GTP then filed before CA a "motion for reconsideration
with alternative prayer to require METROBANK to furnish GTP of the alleged unpaid balance of
Mr. Chia." Decision was then rendered affirming the judgment of the RTC. Hence, the instant
petition.

Issue:

WON METROBANK is estopped from refusing the discharge of the REM on the subject
property.

Held:

YES.

Petitioner METROBANK is estopped from refusing the discharge of the real estate mortgage on
the claim that the subject property still secures "other unliquidated past due loans." In
Maneclang vs. Baun, this Court enumerated the requisites for estoppel by conduct to operate, to
wit:

1. there must have been a representation or concealment of material facts;

Respondent GTP, thru Atty. Atienza, requested from METROBANK that he be furnished a copy
of the full indebtedness secured by the REM. In response, petitioner issued a statement of
account as of September 15, 1980 which amount was immediately settled and paid the next
day amounting to P116,416.71. METROBANK is thus barred from taking a stand inconsistent
with its representation upon which GTP, as an innocent third person to the real mortgage
agreement, placed exclusive reliance. Respondent had the reasonable right to rely upon such
representations as true, considering that it had no participation whatsoever in the mortgage
agreement and the preparation of the statement of account, coupled with the expectation that a

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Estoppel

reputable banking institution such as petitioner do conduct their business concerns in the
highest standards of efficiency and professionalism. For an admission or representation is
rendered conclusive upon the person making it, and cannot be denied or disproved as
against a person relying thereon. A party may not go back on his own acts and
representations to the prejudice of the other party who relied upon them. In the law of
evidence, whenever a party has, by his own declaration, act or omission, intentionally
and deliberately led another to believe a particular thing true, and to act upon such belief,
he cannot, in any litigation arising out of such declaration, act, or omission, be permitted
to falsify it.

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Estoppel

#45 PBCom v. CA
(March)

Facts:
Chee Puen and Olympia Puen are estranged husband and wife. This controversy arose
when they were still living together and Olympia was the President of Global Inc, a
pharmaceutical company and Chee is its General Manager. The records show that Chee Puen
informed Olympia that their company needed a P300,000.00 loan for its operational expenses.
He proposed that her paraphernal lot in Makati be used as collateral. Thus, she was asked to
sign three (3) sets of blank forms of real estate mortgage (REM) of PBCom. He wrote down in
pencil the figure 300 under the space provided for the amount to be loaned and indicated with
checkmarks the spaces where Olympia should sign. Olympia signed the blank mortgage forms
due to Chee Puen's representation. Chee Puen had the mortgage document later notarized by
Atty. Edilberto Arzadon, using a residence certificate bearing Olympia's forged signature.

It appears, however, that Chee Puen then applied for a P3,000,000.00 loan from PBCom
for Global, Inc. To secure the loan, he mortgaged Olympia’s paraphernal lot in Makati, using
the blank real estate mortgage forms signed by her. He also submitted a "Secretary's
Certificate of Board Resolution" where he misrepresented himself as president and acting
corporate secretary of Global, Inc. It is established that PBCom did not investigate Chee Puen's
authority to mortgage Olympia's property. Olympiat's signature in her residence certificate was
not verified. Neither was the verity of the "Secretary's Certificate of Board Resolution"
ascertained. The P3,000,000.00 loan was approved without undergoing the usual bank
procedure.

3 years later Olympiaand Chee Puen had a quarrel because she refused to give the
cash allegedly needed for Global, Inc. Chee Puen threatened herto leave their company. A
special meeting of Global's board of directors was called and it passed a resolution replacing
Chee Puen as official signatory of its checks.

Olympia then personally delivered a copy of the board resolution to the Buendia branch
of PBCom. On the occasion, she chanced upon Chee Puen while encashing two (2) checks for
Global, Inc. Olympia tore the checks into pieces he has been disauthorized to manage the
company. When Chee Puen left, the teller informed Olympia that Chee Puen had obtained a
loan of P3,000,000.00 from the bank. Hence, Olympia sought the nullification of the REM. RTC
ruled in favor of Olympia. CA affirmed

Issue: WON Olympia was estopped/barred from questioning the legality/validity of the REM

Held: No estoppel.

Case law tells us that the elements of estoppel are: "first, the actor who usually must
have knowledge, notice or suspicion of the true facts, communicates something to another in a
misleading way, either by words, conduct or silence; second, the other in fact relies, and relies
reasonably or justifiably, upon that communication; third, the other would be harmed materially if
the actor is later permitted to assert any claim inconsistent with his earlier conduct; and fourth,
the actor knows, expects or foresees that the other would act upon the information given or that
a reasonable person in the actor's position would expect or foresee such action."

The established facts preclude the application of estoppel against the Olympia. Olympia
did not deliberately or intentionally lead the PBCom to believe that she was putting up her

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Estoppel

paraphernal property to secure a P3 M loan of Global, Inc. It was Chee Puen who made the
misrepresentation thus defrauding Olympia herself. Furthermore, PBCom's reliance on the
mortgage application signed in blank by Oympia is not a reasonable reliance. As a banking
institution, the bank was grossly negligent when (a) it took no step to verify whether she was
really offering her paraphernal property as collateral; (b) made no credit check on Olympia and
Global, Inc.; and (c) conducted no investigation on the authenticity of the "Secretary's Certificate
of Board Resolution" . The business of a bank is affected with public interest and it should
observe a higher standard of diligence when dealing with the public. Neither will it matter that
PBCom itself was misled by Chee Puen, a third person to the contract. Under Article 1342 of
the Civil Code, the misrepresentation of a third person will vitiate consent if it has resulted in
substantial mistake and the same is mutual.

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Estoppel

#46 Roblett Industrial V. Ca

Facts:

Roblett Industrial Construction Corporation (RICC), through its Assistant Vice President for
Finance Candelario S. Aller Jr., entered into an Agreement with Contractors Equipment
Corporation (CEC). CEC leased to RICC various construction equipment. As an off-setting
arrangement CEC received from RICC construction materials.

In claiming the balance, CEC sent a demand letter to RICC. RICC however declined to pay the
balance owing to the fact that its board did not authorize Aller to enter into the Agreement.

Issue:

WON RICC was estopped from denying Aller’s authority to contract on its behalf.

Held: YES.

Estoppel in pais arises when one, by his acts, representations or admissions, or by his own
silence when he ought to speak out, intentionally or through culpable negligence, induces
another to believe certain facts to exist and such other rightfully relies and acts on such belief,
so that he will be prejudiced if the former is permitted to deny the existence of such facts. This
doctrine obtains in the present case. A statement of account received from CEC by RICC with
nary a protest from the latter. Neither did RICC controvert the demand letter concerning its
overdue account; on the contrary, it asked for ample time to source funds to substantially settle
the account. e latter. Neither did petitioner controvert the demand letter concerning the overdue
account of P237,909.38; on the contrary, it asked for ample time to source funds to substantially
settle the account.

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