PNB v.

IAC
G.R. No. 66715 Sept. 18, 1990

FACTS:
- Leticia de la Vina-Sepe executed a real estate mortgage in favor of PNB, San Carlos Branch,
over a lot registered in her name to secure the payment of a sugar crop loan of P3,400.
- Later, Leticia 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) as
additional collateral for Sepe's increased loan of P16,500.
- Leticia Sepe and private respondent Alcedo verbally agreed to split fty- fty (50-50) the
proceeds of the loan (p. 94, Rollo) but failing to receive his one-half share from her, Alcedo
wrote a letter on May 12, 1970 to the PNB, San Carlos Branch, 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, Jose T. Gellegani 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.
- On the same day, May 22, 1970, PNB advised Sepe in writing to replace Lot No. 1402 with
another collateral of equal or higher value.
- 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 January 15, 1974, Alcedo received two (2) letters from PNB: (1) informing him
of Sepe's failure to pay her loan in the total amount of P 56,638.69; and (2) giving him six (6)
days to settle Sepe's outstanding obligation, as otherwise, foreclosure proceedings would
be commenced against his property. Alcedo requested Sepe to pay her accounts to forestall
foreclosure proceedings against his property, but to no avail.

ISSUE:
- WON 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
- the SC agree with the opinion of the appellate court that under the doctrine of promissory
estoppel, the act and assurance given by the PNB to Alcedo "that we shall exclude the
aforementioned lot as a collateral of Leticia de la Vina-Sepe in our recommendation for her
sugar crop loan is binding on the bank.
- The doctrine of estoppel is based upon the grounds of public policy, fair dealing, good faith
and justice, and its purpose is to forbid one to speak against its own act, representations, or
commitments to the injury of one to whom they were directed and who reasonably relied
thereon. Having given that assurance, the bank may not turn around and do the exact
opposite of what it said it would not do.
- 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. Since Alcedo’s
property secured only P13,100.00 of Sepe’s 1970-71 sugar crop loan of P16,500.00
(because P3,400 was secured by Sepe’s own property), Alcedo’s property may be held to
answer for only the unpaid balance, if any, of Sepe’s 1970-71 loan, but not the 1971-72 crop
loan.
fi
fi