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Doctrine:: de Leon, JR., J.

The Supreme Court ruled that the doctrine of promissory estoppel did not apply in this case. Promissory estoppel requires a clear and unambiguous promise, but the petitioner failed to prove that the Philippine National Bank (PNB) unambiguously promised to approve a five-year restructuring plan for the petitioner's loans. While the petitioner claimed PNB approved a five-year restructuring, the two promissory notes signed by the petitioner stated they were due in two years, not five. As there was no evidence of a clear promise by PNB to restructure the loans for five years, promissory estoppel did not apply to prevent PNB from enforcing the two-year terms in the promissory notes

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306 views2 pages

Doctrine:: de Leon, JR., J.

The Supreme Court ruled that the doctrine of promissory estoppel did not apply in this case. Promissory estoppel requires a clear and unambiguous promise, but the petitioner failed to prove that the Philippine National Bank (PNB) unambiguously promised to approve a five-year restructuring plan for the petitioner's loans. While the petitioner claimed PNB approved a five-year restructuring, the two promissory notes signed by the petitioner stated they were due in two years, not five. As there was no evidence of a clear promise by PNB to restructure the loans for five years, promissory estoppel did not apply to prevent PNB from enforcing the two-year terms in the promissory notes

Uploaded by

Tootsie Guzma
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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G.R. No.

116710      June 25, 2001


DANILO D. MENDOZA, also doing business under the name and style of ATLANTIC
EXCHANGE PHILIPPINES, petitioner,
vs.
COURT OF APPEALS, PHILIPPINE NATIONAL BANK, FERNANDO MARAMAG, JR., RICARDO
G. DECEPIDA and BAYANI A. BAUTISTA, respondents.

DE LEON, JR., J.:

Doctrine:

The doctrine of promissory estoppel is an exception to the general rule that a promise of future
conduct does not constitute an estoppel. In some jurisdictions, in order to make out a claim of
promissory estoppel, a party bears the burden of establishing the following elements: (1) a
promise reasonably expected to induce action or forebearance; (2) such promise did in fact
induce such action or forebearance, and (3) the party suffered detriment as a result.

Facts:

Petitioner is engaged in the domestic and international trading of raw materials and chemicals.
Sometime in 1978 he was granted by respondent Philippine National Bank (PNB) a
(P500,000.00) credit line and a (P1,000,000.00) Letter of Credit/Trust Receipt (LC/TR) line.

On March 9, 1981, he wrote a letter to respondent PNB requesting for the restructuring of his
past due accounts into a five-year term loan and for an additional LC/TR line of
(P2,000,000.00). However, PNB replied requiring the petitioner to submit the necessary
documents before the bank would act on his request and suggest to petitioner to reduce his
total loan obligations to (P3,000,000.00).

In a letter dated July 2, 1982, petitioner offered the following revised proposals to respondent
bank: 1) the restructuring of past due accounts including interests and penalties into a 5-year
term loan, payable semi-annually with one year grace period on the principal; 2) payment of
(P400,000.00) upon the approval of the proposal; 3) reduction of penalty from 3% to 1%; 4)
capitalization of the interest component with interest rate at 16% per annum; 5) establishment of
a (P1,000,000.00) LC/TR line against the mortgaged properties; 6) assignment of all his export
proceeds to respondent bank to guarantee payment of his loans.

According to petitioner, respondent PNB approved his proposal. He further claimed that he and
his wife were asked to sign two (2) blank promissory note forms. According to petitioner, they
were made to believe that the blank promissory notes were to be filled out by respondent PNB
to conform with the 5-year restructuring plan allegedly agreed upon.

Petitioner testified, among others that respondent PNB allegedly contravened their verbal
agreement by 1) affixing dates on the two (2) subject promissory notes to make them mature in
two (2) years instead of five (5) years as supposedly agreed upon.

Petitioner failed to pay the subject two (2) Promissory Notes Nos. 127/82 and 128/82 as they fell
due.Respondent PNB extra-judicially foreclosed the real and chattel mortgages, and the
mortgaged properties were sold at public auction to respondent PNB, as highest bidder, for a
total of (P3,798,719.50).

Petitioner filed a complaint for specific performance and nullification of the extra-judicial
foreclosure and damages against respondents PNB. He alleged that the Extrajudicial
Foreclosure Sale of the mortgaged properties was null and void since his loans were
restructured to a five-year term loan; hence, it was not yet due and demandable.

The RTC rendered a Decision in favor of the Petitioner, however the CA reversed the ruling of
court a quo, hence this Petition.

Issue:

Whether the doctrine of promissory estoppel is applicable to the case?

Ruling:

NO, it is not applicable. It is clear from the foregoing that the doctrine of promissory estoppel
presupposes the existence of a promise on the part of one against whom estoppel is claimed.
The promise must be plain and unambiguous and sufficiently specific so that the Judiciary can
understand the obligation assumed and enforce the promise according to its terms. For
petitioner to claim that respondent PNB is estopped to deny the five-year restructuring plan, he
must first prove that respondent PNB had promised to approve the plan in exchange for the
submission of the proposal. As discussed earlier, no such promise was proven, therefore, the
doctrine does not apply to the case at bar. A cause of action for promissory estoppel does not
lie where an alleged oral promise was conditional, so that reliance upon it was not reasonable. It
does not operate to create liability where it does not otherwise exist.

Since there is no basis to rule that petitioner's overdue loan obligations were restructured to
mature in a period of five (5) years, we see no other option but to respect the two-year period as
contained in the two (2) subject Promissory Notes Nos. 127/82 and 128/82, marked as Exhibits
"BB" and "CC" respectively which superseded and novated all prior loan documents signed by
petitioner in favor of respondent PNB. Petitioner argues, in his memorandum, that "respondent
Court of Appeals had no basis in saying that the acceptance of the five-year restructuring is
totally absent from the record." On the contrary, the subject Promissory Notes Nos. 127/82 and
128/82 are clear on their face that they were due on December 29, 1984 or two (2) years from
the date of the signing of the said notes on December 29, 1982.

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