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*
G.R. No. 122899. June 8, 2000.

METROPOLITAN BANK & TRUST COMPANY, petitioner, vs.

COURT OF APPEALS and G.T.P. DEVELOPMENT
CORPORATION, respondents.

Estoppel by Conduct; Requisites; Words and Phrases.—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; “2. the
representation must have been with knowledge of the facts; “3. the party to
whom it was made must have been ignorant of the truth of the matter; and
“4. it must have been with the intention that the other party would act upon
it.”
Same; Admissions; An admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved as
against a person relying thereon.—Respondent GTP, thru Atty. Atienza,
requested from METROBANK that he be furnished a copy of the full
indebtedness secured by the real estate mortgage. In response thereto,
petitioner METROBANK 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. Petitioner METROBANK is thus barred from
taking a stand inconsistent with its representation upon which respondent
GTP, as an innocent third person to the real mortgage agreement, placed
exclusive reliance. Respondent GTP 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 reputable banking institution
such as petitioner METROBANK 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

_______________

* SECOND DIVISION.

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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.
Evidence; When the evidence tends to prove a material fact which
imposes a liability on a party, and he has it in his power to produce
evidence which from its very nature must overthrow the case made against
him if it is not founded on fact, and he refuses to produce such evidence, the
presumption arises that the evidence, if produced, would operate to his
prejudice, and support the case of his adversary.—Just as decisive is
petitioner METROBANK’s failure to bring before respondent Court of
Appeals the current statement evidencing what it claims as “other
unliquidated past due loans” at the scheduled hearing of 8 March 1995. It
was a golden opportunity, so to speak, lost for petitioner METROBANK to
defend its non-release of the real estate mortgage. Thus, the following
pronouncements of this Court in Manila Bay Club Corporation vs. Court of
Appeals, et al., speaking thru Mr. Justice Ricardo Francisco, find rightful
application, viz.—“It is a well-settled rule that when the evidence tends to
prove a material fact which imposes a liability on a party, and he has it in his
power to produce evidence which from its very nature must overthrow the
case made against him if it is not founded on fact, and he refuses to produce
such evidence, the presumption arises that the evidence, if produced, would
operate to his prejudice, and support the case of his adversary, x x x” “No
rule of law is better settled than that a party having it in his power to prove a
fact, if it exists, which, if proved, would benefit him, his failure to prove it
must be taken as conclusive that the fact does not exist.”

PETITION for review on certiorari of a decision of the Court of

Appeals.

The facts are stated in the opinion of the Court.

     Peres & Calma Law Offices for petitioner.
     Arturo S. Santos for private respondent.

BUENA, J.:

This petition for review on certiorari under Rule 45 of the Rules of

Court assails (1) the amended decision of public re-

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Metropolitan Bank & Trust Company vs. Court of Appeals

1
spondent Court of Appeals dated 03 July 1995 in CA-GR CV No.
33395 affirming the trial court’s judgment ordering herein petitioner
Metropolitan Bank and Trust Company (hereafter, METROBANK)
to release/cancel the real estate mortgage constituted over the subject
property, and (2) the respondent court’s resolution dated 04
December 1995 denying petitioner METROBANK’s motion for
reconsideration.
The subject property is a parcel of land in Diliman, Quezon City
consisting of six hundred ninety (690) square meters originally
owned by businessman Tomas Chia under Transfer Certificate of
Title No. RT-16753 (106901) of the Registry of Deeds for Quezon
City. Saddled with debts and business reverses, Mr. Chia offered the
subject property for sale to private respondent G.T.P. Development
Corporation (hereafter, GTP), with assumption of the mortgage
indebtedness in favor of petitioner METROBANK secured by the
subject property.
Pending negotiations for the proposed sale, Atty. Bernardo
Atienza, acting in behalf of respondent GTP, went to the
METROBANK branch in Quiapo, Manila sometime in the last week
of August 1980 to inquire on Mr. Chia’s remaining balance on the
real estate mortgage. METROBANK obliged with a statement of
account of Mr. Chia amounting to about P115,000.00 as of August,
1980. 2 3
The deed of sale and the memorandum of agreement between
Mr. Chia and respondent GTP were eventually executed and signed
on 04 September 1980 in the office of Atty. Atienza. Twelve (12)
days later, or on 16 September 1980, Atty. Atienza went to
METROBANK Quiapo Branch and paid one hundred sixteen
thousand four 4 hundred sixteen pesos and seventy-one centavos
(P116,416.71), for which METROBANK issued an official receipt
acknowledging payment.

_______________

1 Former Second Division composed of Justice Fidel P. Purisima, Chairman

(ponente), Justice Jainal D. Rasul, and Justice Eubolo G. Verzola, members.
2 Exhibit “A”; Records, pp. 146-147.
3 Exhibit “E”; Records, pp. 153-154.
4 Exhibit “C”; Records, p. 150.

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This notwithstanding, petitioner METROBANK Refused to release

the real estate mortgage on the subject property despite repeated
requests from Atty. Atienza, thus prompting respondent GTP to file
on October 17, 1980 an action for specific performance against
petitioner METROBANK and Mr. Chia.
In answer to the complaint, Mr. Chia denied having executed any
deed of sale in favor of respondent GTP involving the subject
property. Petitioner for its part justified its non-release of the real
estate mortgage (1) upon the advise of Mr. Chia that he never
executed any sales agreement with respondent GTP, and (2) by the
fact that there are other loans incurred by Mr. Chia which are also
secured by the subject property.
After trial, judgment was rendered by the regional trial court on
11 December 1990 granting the reliefs prayed for by respondent
GTP as plaintiff, viz.:

“WHEREFORE, after a careful and thorough study of the record, this Court
holds that in view of the facts contained in the records, judgment is hereby
rendered in favor of plaintiff and against defendants, ordering—

“l. Defendant Metropolitan Bank & Trust Co. to execute the release or
cancellation of the real estate mortgages executed by the deceased
defendant Tomas Chia and his wife, defendant Vicenta Chia, over
the property described in TCT No. 106901 of the registry of deeds
for Quezon City;
“2. Defendants to surrender or deliver the owner’s duplicate copy of
said TCT No. 106901; and,
3. “ Defendants to pay, jointly and severally, the sum of P10,000.00 as
and for attorney’s fees, plus costs of suit.

“The counterclaims set up by both defendants are dismissed.

5
“IT IS SO ORDERED.”

_______________

5 Records, pp. 515-521; Rollo, p. 63.

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Metropolitan Bank & Trust Company vs. Court of Appeals

On appeal, respondent Court of Appeals rendered a Decision dated

6
24 October 1994 reversing the trial court’s 11 December 1990
judgment, ruling in the main that the one hundred sixteen thousand
four hundred sixteen pesos and seventy-one centavos (P116,416.71)
paid by respondent GTP to petitioner METROBANK did not
extinguish the real estate mortgage inasmuch as there are other
unliquidated past due loans secured by the subject property.
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With this unfavorable

7
turn of events, respondent GTP, on 07
November 1994, filed before respondent Court of Appeals a
“motion for reconsideration with alternative prayer to require
METROBANK to furnish appellee (GTP) of the alleged unpaid
balance of Mr. Chia.” At the re-scheduled date of oral arguments on
08 March 1995 where METROBANK was supposed to bring before
the respondent Court the current statement of the mortgage debt of
Mr. Chia secured by the deeds of mortgage sought to be released,
METROBANK’s counsel did not appear; only the lawyers of
respondent GTP and Mr. Chia appeared. Thus, the Court required
GTP’s counsel to file a memorandum in lieu of8 oral arguments in
support of its motion for reconsideration. GTP filed its
9
memorandum on March 17, 1995 to which a reply memorandum
10
was filed by METROBANK 11
on April 10, 1995.
On 03 July 1995, the now assailed amended decision was
rendered reconsidering the original 24 October 1994 Decision and
thus affirming the 11 December 1990 judgment of the regional trial
court. Respondent Court of Appeals took a second hard look at the
evidence on hand and seriously considered METROBANK’s refusal
to specify any unpaid debt secured by the subject property, in
concluding anew that “the present case for specific performance is
well-grounded, absent

_______________

6 Records, pp. 305-316.

7 Records, p. 320.
8 Records, p. 345.
9 Records, pp. 346-353.
10 Records, pp. 356-361.
11 Records, pp. 371-375.

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indubitable showing that the aforesaid amount of P116,416.71 paid

by appellee on September 16, 1980 did not suffice to pay in full the
mortgage debt assumed under the Deed of Absolute Sale, with
assumption of mortgage, it inked with the late Tomas Chia. There is
therefore merit in its motion for reconsideration at bench.” Petitioner
METROBANK is now before us after its motion for reconsideration
of the 03 July 1995 amended decision was denied by respondent
12
Court of Appeals per Resolution of 04 December 1995.
We find no compelling reasons to disturb the assailed decision.
We quote with favor the following pronouncements of
respondent Court of Appeals in the Amended Decision, thus:

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“x x x. In the case under scrutiny, we are convinced that We erred in

reversing the appealed judgment despite the finding that subject property
covered by TCT 106901-Quezon City had been sold, in a manner absolute
and irrevocable, by the spouses, Tomas Chia and Vicenta Chan, to plaintiff-
appellee, and on September 16, 1980, the latter complied with its
contractual obligation thereunder by paying the total mortgage debt it
assumed, amounting according to Metrobank itself, to P116,416.71, as of
September 16, 1980.
“All things studiedly viewed in proper perspective, we are of the
opinion, and so rule, that whatever debts or loans mortgagor Chia contracted
with Metrobank after September 4, 1980, without the conformity of
plaintiff-appellee, could not be adjudged as part of the mortgage debt the
latter so assumed. We are persuaded that the contrary ruling on this point in
Our October 24, 1994 decision would be unfair and unjust to plaintiff-
appellee because, before buying subject property and assuming the
mortgage debt thereon, the latter inquired from Metrobank about the exact
amount of the mortgage debt involved.
“The stipulation in subject Deeds of Mortgage that mortgagors’ debts
subsequently obtained would be covered by the same security became
inapplicable, when mortgagor sold to appellee the mortgaged property with
the knowledge of the mortgagee bank. Thus, since September 4, 1980, it
was obvious that whatever additional

_______________

12 Rollo, p. 53.

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Metropolitan Bank & Trust Company vs. Court of Appeals

loan mortgagor got from Metrobank, the same was not chargeable to and
collectible from plaintiff-appellee. It is then decisively clear that Metrobank
is without any valid cause or ground not to release the Deeds of Mortgage in
13
question, despite full payment of the mortgage debt assumed by appellee.”

Petitioner METROBANK is estopped from refusing the discharge of

the real estate mortgage on the claim that the subject property still
secures
14
“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;
“2. the representation must have been with knowledge of the facts;
“3. the party to whom it was made must have been ignorant of the truth
of the matter; and

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“4. it must have been with the intention that the other party would act
upon it.”

Respondent GTP, thru Atty. Atienza, requested from METROBANK

that he be furnished a copy
15
of the full indebtedness secured by the
real estate mortgage. In response thereto, petitioner
METROBANK issued a statement of account as of September 15,
16
1980 which amount was immediately settled and paid the next day
amounting to P116,416.71. Petitioner METROBANK is thus barred
from taking a stand inconsistent with its representation upon which
respondent GTP, as an innocent third person to the real mortgage
agreement, placed exclusive reliance. Respondent GTP 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

_______________

13 Rollo, p. 51.
14 208 SCRA 179, 192 (1992).
15 Exhibit “Q”; Records, p. 176.
16 Exhibit “B”; Records, p. 149.

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Metropolitan Bank & Trust Company vs. Court of Appeals

account, coupled with the expectation that a reputable banking

institution such as petitioner METROBANK 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
17
declaration, act, or omission, be permitted to falsify it.
Just as decisive is petitioner METROBANK’s failure to bring
before respondent Court of Appeals the current statement evidencing
what it claims as “other unliquidated past due loans” at the
scheduled hearing of 8 March 1995. It was a golden opportunity, so
to speak, lost for petitioner METROBANK to defend its non-release
of the real estate mortgage. Thus, the following pronouncements of
this18Court in Manila Bay Club Corporation vs. Court19of Appeals, et
al., speaking thru Mr. Justice Ricardo Francisco, find rightful
application, viz.—
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“It is a well-settled rule that when the evidence tends to prove a material
fact which imposes a liability on a party, and he has it in his power to
produce evidence which from its very nature must overthrow the case made
against him if it is not founded on fact, and he refuses to produce such
evidence, the presumption arises that the evidence, if produced, would
operate to his prejudice, and support the case of his adversary, x x x”
“No rule of law is better settled than that a party having it in his power to
prove a fact, if it exists, which, if proved, would benefit

_______________

17 Laureano Investment and Development Corporation vs. CA, 272 SCRA 253, 263 (1997),
citing Caltex v. CA, 212 SCRA 448, 457 (1992).
18 249 SCRA 303, 306 (1995).
19 Now retired.

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Metropolitan Bank & Trust Company vs. Court of Appeals

him, his failure to prove it must be taken as conclusive that the fact does not
exist.”
x x x      x x x      x x x
“Where facts are in evidence affording legitimate inferences going to
establish the ultimate fact that the evidence is designed to prove, and the
party to be affected by the proof, with an opportunity to do so, fails to deny
or explain them, they may well be taken as admitted with all the effect of the
inferences afforded, x x x”
“The ordinary rule is that one who has knowledge peculiarly within his
own control, and refuses to divulge it, cannot complain if the court puts the
most unfavorable construction upon his silence, and infers that a disclosure
would have shown the fact to be as claimed by the opposing party.”

Verily, petitioner METROBANK’s omission to present its evidence

only created an adverse inference against its cause. Therefore, it
cannot now be heard to complain since respondent Court extended a
reasonable opportunity to petitioner METROBANK that it did not
avail.
WHEREFORE, the petition is DENIED. The amended decision
of respondent Court of Appeals dated 3 July 1995 as well as its
resolution of 4 December 1995 is AFFIRMED, with costs against
petitioner.
SO ORDERED.

          Bellosillo (Actg. C.J., Chairman), Mendoza, Quisumbing

and De Leon, Jr., JJ., concur.

Petition denied, judgment and resolution affirmed.

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Note.—Estoppel is a shield against injustice and a party invoking

its protection should not be allowed to use the same to conceal his or
her own lack of diligence. (Mijares vs. Court of Appeals, 271 SCRA
558 [1997])
A party, haying performed affirmative acts upon which another
person based his subsequent actions, cannot thereafter refute his acts
or renege on the effects of the same, to the

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People vs. Mumar

prejudice of the latter. (Pureza vs. Court of Appeals, 290 SCRA 110
[1998])
A person cannot accept and reject the same instrument.
(Associated Bank vs. Court of Appeals, 291 SCRA 511 [1998])

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