View full case

PHILIPPINE NATIONAL BANK v. IAC

FACTS:

The petitioner seeks to set aside the decision of the Intermediate Appellate Court, which upheld the decision of the Court of First Instance of Negros Occidental. Leticia de la Vina-Sepe executed a real estate mortgage with Philippine National Bank (PNB) to secure a sugar crop loan. Leticia, acting as attorney-in-fact for her brother-in-law Romeo Alcedo, included Alcedo's lot as additional collateral for her increased loan. However, Alcedo did not receive his share of the loan proceeds as agreed upon. In response, Alcedo revoked the power of attorney authorizing the mortgage of his lot. PNB acknowledged the revocation but still allowed Leticia to obtain an additional loan using Alcedo's property as collateral. Alcedo received letters from PNB about Leticia's failure to pay the loan and demanded payment, but Leticia did not comply. Alcedo then sued Leticia and PNB for collection and injunction with damages. PNB filed for extrajudicial foreclosure of the mortgage during the case and the property was eventually sold to PNB. Alcedo amended his complaint to include the annulment of the foreclosure sale and the reconveyance of the land to him. The trial court ruled in favor of Alcedo, declaring the foreclosure sale null and void, ordering PNB to reconvey the land free from liens and encumbrances, and awarding damages. The appellate court affirmed the decision of the trial court.

ISSUES:

  1. Whether the doctrine of promissory estoppel applies to the case.

  2. Whether PNB validly foreclosed the real estate mortgage despite the revocation of the Special Power of Attorney and the bank's assurance to exclude the property as collateral.

RULING:

  1. The Court of Appeals held that the doctrine of promissory estoppel applies to the case. The court cited the letters exchanged between PNB and the plaintiff, which clearly showed the bank's assurance that the plaintiff's property would not be accepted as collateral for the loan. Based on these letters and the principle of estoppel by deed, the court ruled that PNB cannot deny or falsify its act or declaration and must be bound by its assurance.

  2. The Court ruled that PNB did not validly foreclose the real estate mortgage. The act and assurance given by the bank to exclude the property as collateral binds the bank under the doctrine of promissory estoppel. The bank cannot do the exact opposite of what it assured to do and must abide by its representations.

PRINCIPLES:

  • The doctrine of promissory estoppel: A party who has intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, cannot, in any litigation arising out of such declaration, act, or omission, be permitted to falsify it. (Art. 1431, Art. 1433 of the New Civil Code, and Sec. 3, paragraph (a), Rule 131 of the Rules of Court)

  • Estoppel by deed: An admission or representation made by a party is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying thereon.

  • Estoppel: Based on equitable principles and aims to aid the law in the administration of justice. It forbids one from speaking against its own act, representations, or commitments to the injury of one who relied on them.