Metropolitan Bank & Trust Company v. Court of Appeals
REITERATIONFacts
The Antecedents: Tomas Chia, owner of a parcel of land in Diliman, Quezon City, mortgaged it to Metropolitan Bank & Trust Company (METROBANK). Facing financial difficulties, Mr. Chia offered to sell the property to G.T.P. Development Corporation (GTP), with GTP assuming the mortgage indebtedness. Atty. Bernardo Atienza, representing GTP, inquired about the outstanding balance from METROBANK, which provided a statement of account of approximately P115,000.00 as of August 1980. A deed of sale and memorandum of agreement were executed between Chia and GTP on September 4, 1980. On September 16, 1980, Atty. Atienza paid P116,416.71 to METROBANK, which issued an official receipt. Despite this payment, METROBANK refused to release the real estate mortgage. Procedural History: GTP filed an action for specific performance against METROBANK and Mr. Chia. Mr. Chia denied executing the deed of sale. METROBANK justified its refusal by stating Mr. Chia's denial of the sale and the existence of other loans secured by the property. The Regional Trial Court (RTC) ruled in favor of GTP, ordering METROBANK to release the mortgage and surrender the title. The Court of Appeals (CA) initially reversed the RTC decision, holding that the payment did not extinguish the mortgage due to other unliquidated loans. However, upon GTP's motion for reconsideration, the CA, in an amended decision, reinstated the RTC's ruling, emphasizing METROBANK's failure to specify any unpaid debt secured by the property and its refusal to provide a current statement of account. METROBANK's motion for reconsideration of the amended decision was denied. The Petition: METROBANK filed a petition for review on certiorari before the Supreme Court, assailing the CA's amended decision and resolution.
Issue(s)
Whether petitioner Metropolitan Bank & Trust Company (METROBANK) is estopped from refusing to release the real estate mortgage on the subject property. Whether petitioner METROBANK's failure to present evidence of "other unliquidated past due loans" creates an adverse inference against its cause.
Ruling
The petition is DENIED. The amended decision of the Court of Appeals dated July 3, 1995, and its resolution dated December 4, 1995, are AFFIRMED. METROBANK is ordered to release/cancel the real estate mortgage constituted over the subject property. Costs against petitioner.
Ratio Decidendi
On Issue 1: The Supreme Court affirmed that METROBANK is estopped from refusing to discharge the real estate mortgage. The Court adopted the CA's pronouncements, which noted that GTP had inquired about the exact amount of the mortgage debt before buying the property and assumed the mortgage, subsequently paying the amount METROBANK itself stated. The Court reiterated the requisites for estoppel by conduct, emphasizing that METROBANK's representation regarding the mortgage balance, upon which GTP relied, bars METROBANK from taking an inconsistent stand. The Court underscored that whatever additional loans Mr. Chia contracted with METROBANK after September 4, 1980, without GTP's conformity, could not be charged to and collected from GTP, as the stipulation in the deeds of mortgage for subsequent debts to be covered by the same security became inapplicable once the mortgaged property was sold with the mortgagee bank's knowledge. On Issue 2: The Supreme Court held that METROBANK's failure to present the current statement evidencing its claimed "other unliquidated past due loans" at the scheduled hearing of March 8, 1995, created an adverse inference against its cause. Citing Manila Bay Club Corporation vs. Court of Appeals et al, the Court reiterated the rule that when a party has it in its power to produce evidence that would overthrow a case against it, and refuses to do so, the presumption arises that such evidence, if produced, would operate to its prejudice. This omission was a golden opportunity lost for METROBANK to defend its non-release of the real estate mortgage. The Court found that METROBANK's silence and refusal to divulge information peculiarly within its control justified the most unfavorable construction upon its stance, inferring that a disclosure would have shown the facts to be as claimed by GTP.
Main Doctrine
A bank is estopped from refusing the discharge of a real estate mortgage when it previously issued a statement of account for the mortgage debt, which was subsequently paid in full, and the bank failed to present evidence of other unliquidated loans secured by the same property during the pendency of the case.