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31 PNB Vs CA, Et Al., G.R. No. 66715, Sept 18, 1990

Romeo Alcedo revoked the special power of attorney that allowed his sister-in-law Leticia Sepe to mortgage his property as collateral for her sugar crop loans from the Philippine National Bank (PNB). The PNB assured Alcedo in writing that it would exclude his property as collateral for Sepe's future loans. However, PNB still allowed Sepe to use Alcedo's property as collateral to increase her loan amount. The Supreme Court ruled that PNB's foreclosure on the mortgage of Alcedo's property was invalid, as PNB was promissorily estopped from going back on its assurance by its prejudicial actions against Alcedo.

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390 views2 pages

31 PNB Vs CA, Et Al., G.R. No. 66715, Sept 18, 1990

Romeo Alcedo revoked the special power of attorney that allowed his sister-in-law Leticia Sepe to mortgage his property as collateral for her sugar crop loans from the Philippine National Bank (PNB). The PNB assured Alcedo in writing that it would exclude his property as collateral for Sepe's future loans. However, PNB still allowed Sepe to use Alcedo's property as collateral to increase her loan amount. The Supreme Court ruled that PNB's foreclosure on the mortgage of Alcedo's property was invalid, as PNB was promissorily estopped from going back on its assurance by its prejudicial actions against Alcedo.

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G.R. No.

66715 September 18, 1990


PHILIPPINE NATIONAL BANK, petitioner, vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT (First Civil Cases Division) and ROMEO
ALCEDO, respondents.
GRIÑO-AQUINO, J.:

FACTS:
Letecia Sepe executed a real estate mortgage in favor of PNB over a lot registered
in her name to secure the payment of a sugar crop loan of P3,400. Later, Sepe, acting as
attorney-in-fact for her brother-in-law, private respondent Romeo Alcedo, executed an
amended real estate mortgage to include his (Alcedo's) Lot as additional collateral for
Sepe's increased loan of P16,500. Sepe and private respondent Alcedo verbally agreed to
split fifty-fifty (50-50) the proceeds of the loan but failing to receive his one-half share
from her, Alcedo wrote a letter on May 12, 1970 to the PNB revoking the Special Power
of Attorney which he had given to Leticia Sepe to mortgage his Lot.

Replying on May 22, 1970, the PNB Branch Manager, advised Alcedo that his land
had already been included as collateral for Sepe's 1970-71 sugar crop loan, which the
latter had already availed of, nevertheless, he assured Alcedo that the bank would
exclude his lot as collateral for Sepe's forthcoming (1971-72) sugar crop loan. The letter
reads “be advised and assured that we shall exclude the aforementioned lot as a collateral
of Leticia de la Vina-Sepe in our recommendation for her 1971-72 sugar crop loan.”

Despite the above advice from PNB, Sepe was still able to obtain an additional loan
from PNB increasing her debt of P 16,500 to P56,638.69 on the security of Alcedo's
property as collateral.

On April 17, 1974, Alcedo sued Sepe and PNB in for collection and injunction with
damages.

ISSUE:
Whether or not PNB validly foreclosed the real estate mortgage on Alcedo's
property despite notice of Alcedo's revocation of the Special Power of Attorney
authorizing Leticia Sepe to mortgage his property as security for her sugar crop loans and
despite the Bank's written assurance to Alcedo that it would exclude his property as
collateral for Sepe's future loan obligations.

RULING:
No, PNB’s foreclosure on the real estate mortgage of Alcedo’s property is invalid.

Under the doctrine of promissory estoppel enunciated in the case of Republic


Flour Mills Inc. vs. Central Bank, L-23542, August 11, 1979, the act and assurance given by
the PNB to Alcedo "that we shall exclude the aforementioned lot [Lot No. 1402] as a
collateral of Leticia de la Vina-Sepe in our recommendation for her 1971-72 sugar crop
loan" is binding on the bank. Having given that assurance, the bank may not turn around
and do the exact opposite of what it said it would not do. One may not take inconsistent
positions (Republic vs. Court of Appeals, 133 SCRA 505). A party may not go back on his
own acts and representations to the prejudice of the other party who relied upon them
(Lazo vs. Republic Surety &Insurance Co., Inc., 31 SCRA 329.)

In the case at bar, since PNB had promised to exclude Alcedo's property as
collateral for Sepe's 1971-72 sugar crop loan, it should have released the property to
Alcedo. The mortgage which Sepe gave to the bank on Alcedo's lot as collateral for her
1971-72 sugar crop loan was null and void for having been already disauthorized by
Alcedo.

The PNB acted with bad faith in proceeding against Alcedo's property to satisfy
Sepe's unpaid 1971-72 sugar crop loan.

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