SECOND DIVISION

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

METROPOLITAN BANK & TRUST COMPANY, petitioner, vs. COURT OF APPEALS and G.T.P. DEVELOPMENT CORPORATION, respondents.

Peres & Calma Law Offices for petitioner.

Arturo S. Santos for private respondent.

SYNOPSIS

Before buying Mr. Chia's property and assuming the mortgage debt thereon, private respondent inquired from METROBANK the exact amount of mortgage debt involved. METROBANK issued a statement of account as of Sept. 15, 1980 amounting to P116,416.71. The next day, respondent settled and paid in full said amount of the mortgage debt. A Deed of Absolute Sale with assumption of mortgage was executed and signed by and between Mr. Chia and private respondent. Notwithstanding, METROBANK refused to release the real estate mortgage on subject property on the ground that there are other unliquidated past due loans secured by subject property. Private respondent sued METROBANK for specific performance. The lower court and later, the Court of Appeals, ordered Metrobank to cancel the real estate mortgages executed by Mr. Chia over subject property. IcDCaS

In affirming the decision on appeal, the Supreme Court held that:

Metrobank is estopped or barred from taking a stand inconsistent with its representation as to the full indebtedness secured by the real estate mortgage upon which respondent, as an innocent third person to the real estate mortgage agreement, placed exclusive reliance. The Court also ruled that Metrobank's failure to present the current statement evidencing "other unliquidated past due loans" to defend its non-release of the real estate mortgage created an adverse inference that a disclosure would have shown the fact to be as claimed by the opposing party.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; PRESUMPTIONS; ESTOPPEL; BANK IS ESTOPPED FROM TAKING AN INCONSISTENT STAND AS TO THE FULL INDEBTEDNESS SECURED BY THE MORTGAGE; CASE AT BAR. 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." . . . 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 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.

2. ID.; ID.; SUPPRESSION OF EVIDENCE; ADVERSE EFFECT OF BANK'S FAILURE TO PRESENT CURRENT STATEMENT OF ACCOUNT EVIDENCING TOTAL MORTGAGE DEBT; CASE AT BAR. 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. . . . 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.

D E C I S I O N

BUENA, J p:

This petition for review on certiorari dated 03 July 1995 in CA-G.R. 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. Cdpr

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.

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 hundred sixteen pesos and seventy-one centavos (P116,416.71), for which METROBANK issued an official receipt acknowledging payment.

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. prLL

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

"1. 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.

"IT IS SO ORDERED."

On appeal, respondent Court of Appeals rendered a Decision dated 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.

With this unfavorable 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 of oral arguments in support of its motion for reconsideration. GTP filed its memorandum on March 17, 1995 to which a reply memorandum was filed by METROBANK 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 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 Court of Appeals per Resolution of 04 December 1995.

We find no compelling reasons to disturb the assailed decision. cdll

We quote with favor the following pronouncements of respondent Court of Appeals in the Amended Decision, thus:

". . . . 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

"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 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 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 "other unliquidated past due loans." In , 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. cdphil

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 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.

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 , speaking thru Mr. Justice Ricardo Francisco, find rightful application, viz.

"It is a well-settled prcd

"No

xxx xxx xxx

"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. . . ."

"The ordinary

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. LLjur

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, (Acting C.J.), Mendoza, Quisumbing and De Leon, Jr., JJ., concur.

Footnotes

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.

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

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.

12. Rollo, p. 53.

13. Rollo, p. 51.

14. 208 SCRA 179, 192.

15. Exhibit "Q"; Records, p. 176.

16. Exhibit "B"; Records, p. 149.

17. , 272 SCRA 253, 263, citing , 212 SCRA 448, 457.

18.

19. now retired.