PACIFIC MILLS, INC. and CLOVER MANUFACTURING CORPORATION v. THE HON. COURT OF APPEALS

G.R. No.  123807 December 13, 2005

Topic: Estoppel in Pais by Admission

FACTS

Plaintiffs, which are sister companies, contracted several loans from defendant DBP. As securities for said loans, plaintiffs mortgaged to defendant DBP several parcels of land covered by TCT Nos. 136639, 136640, 136641, 134249 and 134252, with a total area of 44,321 square meters and their improvements, and the acrylic, spinning and finishing equipments. On June 30, 1986, the accounts of plaintiffs were transferred to defendant APT, but the Remedial Management Group of defendant DBP still handled the accounts for defendant APT.

In a letter, dated August 20, 1987, defendant DBP informed plaintiffs-petitioners that the Central Bank, per their debt-equity swap arrangement, credited to its account P4,165,756.29, which amount was used to pay the remaining balance of plaintiffs, including additional charges thereon, amounting to P4,018,940.67 as of August 12, 1987; that the excess amount of P146,815.62 shall be refunded to plaintiffs by way of credit to the savings account to be set up for plaintiff Pacific Mills, Inc. with defendant DBP; and that the Legal Department of defendant DBP was preparing the necessary deed of cancellation of mortgage, which document would be released after the clearance of plaintiff’s accounts with the Transaction Processing department of defendant DBP.

Thereafter, in the letter, dated October 5, 1987, plaintiffs, among other things, demanded from the latter to return the excess amount of P146,815.62, with interest. The claim for refund was referred by defendant DBP to the Central Bank for approval. However, per post-audit of plaintiffs’ accounts by the Commission on Audit, there existed an unpaid balance of P4,855,910.67. The statement of account of plaintiffs showed that as of August 12, 1987, the outstanding obligations of plaintiffs, after the debt-equity swap arrangement with the Central Bank, was P5,152,916.98, the amount determined after computation of the interests, advances and the payments made by the plaintiffs from 1985 to 1987. Due to the refusal of defendants to cancel the mortgages on the properties of plaintiffs, the latter instituted the present suit.

ISSUE

Whether or not the respondent DBP is already estopped from claiming that the obligation of the petitioners is not fully settled when it issued its

letter dated August 20, 1987, therein admitting that the obligation was already paid and that there were excess payments made by the petitioners

RULING

No.

For estoppel to exist though, it is indispensable that there be a declaration, act or omission by the party who is sought to be bound. Nor is this all. It is equally a requisite that he, who would claim the benefits of such a principle, must have altered his position, having been so intentionally and deliberately led to comport himself thus, by what was declared or what was done or failed to be done. (Dizon v. Suntay, 29 September 1972)

In estoppel by pais, as related to the party sought to be estopped, it is necessary that there be a concurrence of the following requisites: (a) conduct amounting to false representation or concealment of material facts or at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (b) intent, or at least expectation that this conduct shall be acted upon, or at least influenced by the other party; and (c) knowledge, actual or constructive, of the actual facts. (Laureano Investment and Development Corporation v. CA, 06 May 1997)

In the instant case, it cannot be concluded that the private respondents are guilty of estoppel in pais for the requisites are not attendant.  There was no false representation or concealment of any material fact on the part of the private respondents.  There was likewise no intent to deceive the petitioners because the inaccuracy was admitted by the private respondents.  During the time that the letter dated 20 August 1987 was sent by DBP to petitioners, the former had no knowledge that there was an error.  The mistake in the computation, when discovered by DBP, was communicated and explained to the petitioners.

The letter of DBP dated 20 August 1987, which supposedly declared that the obligations of petitioners have been fully complied with, was corrected by the former after a period of five (5) months only.  This five-month period was devoted by DBP in processing all the clearances needed for the closure of petitioners’ accounts.  It was during this time that the mistake in the computation was discovered during post audit adjustments.  A letter dated 06 January 1988 was sent by DBP communicating to petitioners about the remaining balance still due from the latter. 

Further, it is clear from the third paragraph that the cancellation of the mortgages constituted in favor of defendant DBP was subject to the

clearance or approval of plaintiffs’ accounts by the Transaction Processing Department (TPD). The latter’s approval can only be made after verification of the complete payment of the loans by plaintiffs. There was no clearance issued by TPD since it was found out later on that there was a mistake in the computation of the accounts of plaintiffs. Since there was no clearance, it could not be expected of DBP to release the Deed of Cancellation of Mortgage.

The petitioners cannot capitalize on the unpremeditated mistake on the part of DBP in the computation of the accounts. In the same vein, DBP cannot be expected to cancel the mortgages when the accounts of petitioners have not been fully settled.

DANILO D. MENDOZA v. COURT OF APPEALS.G.R. No. 116710      June 25, 2001

Topic: Estoppel in Pais by Promise

FACTS

As security for the credit accommodations acquired by petitioner, and for those which may thereinafter be granted, petitioner mortgaged to respondent PNB three parcels of land, his house and lot in Quezon City, and several pieces of machinery and equipment in his Pasig coco-chemical plant. Petitioner made use of his LC/TR line to purchase raw materials from foreign importers. He signed a total of 11 documents denominated as "Application and Agreement for Commercial Letter of Credit"

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. Petitioner claimed he was forced to agree to these changes and that he was required to submit a new formal proposal and to sign 2 blank promissory notes. 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 failed to pay the subject 2 promissory notes 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.

ISSUE

Whether or not PNB is estopped denying the 5-year restructuring plan

RULING

No.

There is nothing in the record that even suggests that respondent PNB assented to the alleged five-year restructure of petitioner’s overdue loan obligations to PNB.

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.

It is clear from the forgoing 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. 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.

Only an absolute and unqualified acceptance of a definite offer manifests the consent necessary to perfect a contract. If anything, those correspondences between the parties only prove that the parties had not gone beyond the preparation stage, which is the period from the start of the negotiations until the moment just before the agreement of the parties

Petitioner claims that the 2 subject promissory notes were signed by him in blank with the understanding that they were to be subsequently filled out to conform with his alleged oral agreements with PNB officials, among which is that they were to become due only after 5 years. Private transactions are presumed to be fair and regular. The burden of presenting evidence to overcome this presumption falls upon petitioner. But apart from petitioner's self-serving verbal declarations, there is no sufficient proof found that the subject 2 promissory notes were completed irregularly.

TERMINAL FACILITIES AND SERVICES CORPORATION v.PHILIPPINE PORTS AUTHORITY and PORT MANAGER

G.R. No. 135639 February 27, 2002Topic: Estoppel in Pais by Promise

FACTS

Sometime in 1975 TEFASCO submitted to PPA a proposal for the construction of a specialized terminal complex with port facilities and a provision for port services in Davao City. The proposed project expects to get a 31% market slice. It will service domestic and foreign vessels. Main products to be handled initially will be bananas in the export trade and beer in the domestic traffic. Banana exporters in Davao, like Stanfilco and Philippine Packing Corporation have signified their intentions to use the port. On April 21, 1976 the PPA Board of Directors passed Resolution No. 7 accepting and approving TEFASCO's project proposal. As a result, TEFASCO contracted dollar loans from private commercial institutions abroad and thereafter poured millions worth of investments in the process of building the port.

Long after TEFASCO broke ground with massive infrastructure work, the PPA Board curiously passed on October 1, 1976 Resolution No. 50 under which TEFASCO, without asking for one, was compelled to submit an application for construction permit. Without the consent of TEFASCO, the application imposed additional significant conditions. Also, two years after the completion of the port facilities and the commencement of TEFASCO's port operations, PPA again issued to TEFASCO another permit under which more onerous conditions were foisted on TEFASCOs port operations. In the purported permit appeared for the first time the contentious provisions for 10% government share out of arrastre and stevedoring gross income and 100% wharfage dues regardless of extent of use of private port facilities and 100% berthing charges on every foreign vessel docking at private wharves loading or discharging commercial or third-party cargoes. Subsequent exactions were made by PPA, which included provisions that special services

income be subjected to "government share" equivalent to ten percent (10%) thereof.

TEFASCO repeatedly asked PPA for extensions to pay these additional obligations and for reduction in the rates. But the PPA's response was final and non-negotiable statements of arrears and current accounts and threats of business closure in case of failure to pay them. TEFASCO requested for the structuring of its account of P3.5 million, resulting to a memorandum, issued by PPA General Manager. TEFASCO sent a series of letters-protest to PPA, for reconsideration of its ultimatum leading to the execution of a memorandum of agreement. TEFASCO received a cease and desist order of PPA for TEFASCO, to stop its commercial port operation. On August 30, 1988 TEFASCO sued PPA and PPA Port Manager, and Port Officer in Davao City for refund of government share it had paid and for damages as a result of alleged illegal exaction from its clients of one hundred percent (100%) berthing and wharfage fees. The complaint also sought to nullify the February 10, 1984 MOA and all other PPA issuances modifying the terms and conditions of the April 21, 1976 Resolution No. 7 above-mentioned.

ISSUE

Whether or not PPA is estopped from reneging on its commitments and covenants as exclusively contained in the inter-agency committee report, PPA Resolution No. 7 and PPA letter dated May 7, 1976 and its enclosure

HELD

Yes.

Estoppel may arise from the making of a promise even though without consideration, if it was intended that the promise should be relied upon and in fact it was relied upon, and if a refusal to enforce it would be virtually to sanction the perpetration of fraud or would result in other injustice. In this respect, the reliance by the promisee is generally evidenced by action or forbearance on his part, and the idea has been expressed that such action or forbearance would reasonably have been expected by the promisor.

The terms and conditions binding TEFASCO are only those enumerated or mentioned in the inter-agency committee report, PPA Resolution No. 7 and PPA letter dated May 7, 1976 and its enclosure. The record shows that PPA made express representations to TEFASCO that it would authorize and support its port project under clear and categorical terms and conditions of an envisioned contract. TEFASCO complied with its obligation which ultimately resulted to the benefit of PPA. And the PPA accepted the project

as completed and authorized TEFASCO to operate the same. Under these circumstances, PPA is estopped from reneging on its commitments and covenants as exclusively contained in the inter-agency committee report, PPA Resolution No. 7 and PPA letter dated May 7, 1976 and its enclosure.

It is true that under P.D. No. 857 (1975) as amended, the construction and operation of ports are subject to licensing regulations of the PPA as public utility. However, the instant case did not arise out of pure beneficence on the part of the government where TEFASCO would be compelled to pay ordinary license and permit fees. TEFASCO accepted and performed definite obligations requiring big investments that made up the valuable consideration of the project. It was not a mere privilege that PPA bestowed upon TEFASCO to construct a specialized terminal complex with port facilities and provide port services in Davao City under PPA Resolution No. 7 and the terms and conditions thereof. Rather, the arrangement was envisioned to be mutually beneficial, on one hand, to obtain business opportunities for TEFASCO, and on the other, enhance PPA's services.

With such considerable amount of money spent in reliance upon the promises of PPA under Resolution No. 7 and the terms and conditions thereof, the authorization for TEFASCO to build and operate the specialized terminal complex with port facilities assumed the character of a truly binding contract between the grantor and the grantee. It was a two-way advantage for both TEFASCO and PPA, that is, the business opportunities for the former and the decongestion of port traffic in Davao City for the latter, which is also the cause of consideration for the existence of the contract.

But even assuming arguendo that TEFASCO relied upon a mere privilege granted by PPA, still the terms and conditions between them as written in the documents approving TEFASCO's project proposal should indubitably remain the same. Under traditional form of property ownership, recipients of privileges or largesses from the government could be said to have no property rights because they possessed no traditionally recognized proprietary interest therein. But the right-privilege dichotomy came to an end when courts realized that individuals should not be subjected to the unfettered whims of government officials to withhold privileges previously given them.

With due consideration for the policy that laws of the land are written into every contract, the said documents stand to be the only source of obligations between the parties. That being the case, it was arbitrary, unreasonable and unfair for PPA to add new burdens and uncertainties into their agreement of which TEFASCO had no prior knowledge even in the context of regulation.

RYUICHI YAMAMOTO v. NISHINO LEATHER INDUSTRIES, INCG.R. No. 150283 April 16, 2008

Topic: Estoppel in Pais by Promise

FACTS

In 1983, petitioner, Ryuichi Yamamoto (Yamamoto), a Japanese national, organized under Philippine laws Wako Enterprises Manila, Incorporated (WAKO), a corporation engaged principally in leather tanning, now known as Nishino Leather Industries, Inc. (NLII), one of herein respondents.

Eventually, Nishino and his brother Yoshinobu Nishino (Yoshinobu) acquired more than 70% of the authorized capital stock of WAKO, reducing Yamamoto's investment therein to, by his claim, 10%, less than 10% according to Nishino. The corporate name of WAKO was later changed to, as reflected earlier, its current name NLII.Negotiations subsequently ensued in light of a planned takeover of NLII by Nishino who would buy-out the shares of stock of Yamamoto. In the course of the negotiations, Yoshinobu and Nishino's counsel Atty. Emmanuel G. Doce (Atty. Doce) advised Yamamoto by letter dated October 30, 1991.

On the basis of such letter, Yamamoto attempted to recover the machineries and equipment which were, by Yamamoto's admission, part of his investment in the corporation, but he was frustrated by respondents, drawing Yamamoto to file on January 15, 1992 before the Regional Trial Court (RTC) of Makati a complaintagainst them for replevin. RTC issued a writ of replevin.

ISSUE

May PROMISSORY ESTOPPEL be claimed against the respondents?

RULING

No.

Under the doctrine of promissory estoppel, estoppel may arise from the making of a promise, even though without consideration, if it was intended that the promise should be relied upon and in fact it was relied upon, and if a refusal to enforce it would be virtually to sanction the perpetration of fraud or would result in other injustice.

Ikuo and Yoshinobu wanted Yamamoto out of the Company. For this purpose negotiations were had between the parties. In paragraph 12 of the Letter, Yamamoto was expressly advised that he could take out the Machinery if he wanted to so, provided that the value of said machines would be deducted from his capital contribution. Respondents cannot now argue that they did not intend for Yamamoto to rely upon the Letter. That was the purpose of the Letter to begin with. Petitioner in fact, relied upon said Letter and such reliance was further strengthened during their meeting at the Manila Peninsula. To sanction respondents’ attempt to evade their obligation would be to sanction the perpetration of fraud and injustice against petitioner.

BUT the aforementioned paragraph 12 of the letter is followed by a request for Yamamoto to give his “comments on all the above, soonest.”

What was thus proffered to Yamamoto was not a promise, but a mere offer, subject to his acceptance. Without acceptance, a mere offer produces no obligation.

Under Article 1181 of the Civil Code, “in conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition.”

There is no showing of compliance with the condition for allowing Yamamoto to take the machineries and equipment, namely, his agreement to the deduction of their value from his capital contribution due him in the buy-out of his interests in NLII. Yamamoto’s allegation that he agreed to the condition remained just that, no proof thereof having been presented.

The machineries and equipment, which comprised Yamamoto’s investment in NLII, thus remained part of the capital property of the corporation.

NYCO SALES CORPORATION v. BA FINANCE CORPORATIONG.R. No. 71694 August 16, 1991

Topic: Estoppel in Pais by Silence

FACTS

Petitioner Nyco Sales Corporation whose president and general manager is Rufino Yao, is engaged in the business of selling construction materials with principal office in Davao City. Sometime in 1978, the brothers Santiago and Renato Fernandez (hereinafter referred to as the Fernandezes), both acting in behalf of Sanshell Corporation, approached Rufino Yao for credit accommodation. They requested Nyco, thru Yao, to grant Sanshell discounting privileges which Nyco had with BA Finance Corporation (hereinafter referred to as BA Finance).

Yao apparently acquiesced, hence on or about November 15, 1978, the Fernandezes went to Yao for the purpose of discounting Sanshell's post-dated check for the amount of P60,000.00. The said check was payable to Nyco. Following the discounting process agreed upon, Nyco, thru Yao, endorsed the check in favor of BA Finance. Thereafter, BA Finance issued a check payable to Nyco which endorsed it in favor of Sanshell. Sanshell then made use of and/or negotiated the check. Accompanying the exchange of checks was a Deed of Assignment executed by Nyco in favor of BA Finance with the conformity of Sanshell. Nyco was represented by Rufino Yao, while Sanshell was represented by the Fernandez brothers. Under the said Deed, the subject of the discounting was the aforecited check. At the back thereof and of every deed of assignment was the Continuing Suretyship Agreement whereby the Fernandezes unconditionally guaranteed to BA Finance the full, faithful and prompt payment and discharge of any and all indebtedness of Nyco .

The BPI check, however, was dishonored by the drawee bank upon presentment for payment. BA Finance immediately reported the matter to the Fernandezes who thereupon issued a substitute check dated February 19, 1979 for the same amount in favor of BA Finance. It was a Security Bank and Trust Company check bearing the number 183157, which was again dishonored when it was presented for payment. Despite repeated demands, Nyco and the Fernandezes failed to settle the obligation with BA Finance, thus prompting the latter to institute an action in court. Nyco and the Fernandezes, despite having been served with summons and copies of the complaint, failed to file their answer and were consequently declared in default. On May 16, 1980, the lower court ruled in favor of BA Finance ordering them to pay the former jointly and severally, the sum of P65,536.67 plus 14% interest per annum from July 1, 1979 and attorney's fees in the amount of P3,000.00 as well as the costs of suit (Rollo, pp. 51-52). Nyco, however, moved to set aside the order of default, to have its answer admitted and to be able to implead Sanshell.

ISSUE

Whether or not Nyco is estopped from denying liability, posing the argument that it never authorized its president, Yao to enter into such transaction with BA Finance

RULING

Yes.

Nyco disowns its President's acts claiming that it never authorized Rufino Yao (Nyco's President) to even apply to BA Finance for credit accommodation. It supports its argument with the fact that it did not issue a Board resolution giving Yao such authority. However, the very evidence on record readily belies Nyco's contention. Its corporate By-Laws clearly provide for the powers of its President, which include, inter alia, executing contracts and agreements, borrowing money, signing, indorsing and delivering checks, all in behalf of the corporation. Furthermore, there was already a previous transaction of discounting of checks involving the same personalities wherein any enabling resolution from Nyco was dispensed with and yet BA Finance was able to collect from Nyco and Sanshell was able to discharge its own undertakings.

Such effectively places Nyco under estoppel in pais which arises when one, by his acts, representations or admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts. Nyco remained silent in the course of the transaction and spoke out only later to escape liability. This cannot be countenanced. Nyco is estopped from denying Rufino Yao's authority as far as the latter's transactions with BA Finance are concerned.

ROBLETT INDUSTRIAL CONSTRUCTION CORPORATION v.COURT OF APPEALS

G.R. No. 116682 January 2, 1997Topic: Estoppel in Pais by Silence

FACTS

On 23 September 1986 respondent Contractors Equipment Corporation (CEC) instituted an action for a sum of money against petitioner Roblett Industrial Construction Corporation (RICC) before the Regional Trial Court of Makati alleging that in 1985 it leased to the latter various construction equipment which it used in its projects. As a result RICC incurred unpaid accounts amounting to P342,909.38.

On 24 July 1986 Mariano R. Manaligod Jr., General Manager of CEC, sent a letter of demand to petitioner through its Vice President for Finance regarding the latter's overdue account of P237,909.38 and sought settlement thereof on or before 31 July 1986. In reply, petitioner requested for thirty (30) days to have enough time to look for funds to substantially settle its account.

Traversing the allegations of respondent, Candelario S. Aller Jr. declared that he signed the Agreement with the real intention of having proof of payment. In fact Baltazar Banlot, Vice President for Finance of petitioner, claimed that after deliberation and audit it appeared that petitioner overpaid respondent by P12,000.00 on the basis of the latter's Equipment Daily Time Reports for 2 May to 14 June 1985 which reflected a total obligation of only P103,000.00.

ISSUE

Whether or not estoppel in pais may lie against the petitioner

RULING

Yes.

Estoppel in pais arises when one, by his acts, representations or admissions, or by his own silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts.

As to the argument of the petitioner that the agreement did not reflect the true intention of the parties, the Court finds that the agreement does reflect the true intention of both parties. A statement of account for P376, 350.18 covering the period above mentioned was received from CEC by petitioner with nary a protest from the latter. Neither did petitioner controvert the demand letter concerning the overdue account of P237, 909.38; on the contrary, it asked for ample time to source funds to substantially settle the account. Clearly, the petitioner did not question its account with plaintiff, nor did it question neither the validity nor the contents of the Agreement.

FAR EAST BANK AND TRUST COMPANY v. LEONOR CAYETANOGR 179909 January 25, 2010

Topic: Estoppel by Laches

FACTS

Respondent Leonor C. Cayetano executed a special power of attorney in favor of her daughter Teresita C. Tabing authorizing her to contract a loan from petitioner in an amount not more than three hundred thousand pesos (P300,000.00) and to mortgage her two (2) lots. For the approval of the loan, Cayetano also executed an affidavit of non-tenancy.

Petitioner loaned Tabing one hundred thousand pesos (P100,000.00) secured by two (2) promissory notes and a real estate mortgage over Cayetano’s two (2) properties. The mortgage document was signed by Tabing and her husband as mortgagors in their individual capacities, without stating that Tabing was executing the mortgage contract for and in behalf of the owner.

Petitioner foreclosed the mortgage for failure of the respondents and the spouses Tabing to pay the loan. More than five (5) years later, Tabing, on behalf of Cayetano, sent a letter to petitioner expressing the intent to repurchase the properties for two hundred fifty thousand pesos (P250,000.00) with proposed terms of payment.

ISSUES

1. Whether or not the principal is bound by the real estate mortgage executed by the authorized agent in her own name without indicating the principal

2. Whether the respondents’ complaint for annulment of mortgage and extrajudicial foreclosure with damages and cancellation of titles be allowed

RULING

1. No.It is a general rule in the law of agency that, in order to bind the

principal by a mortgage on real property executed by an agent, it must upon its face purport to be made, signed and sealed in the name of the principal, otherwise, it will bind the agent only. It is not enough merely that the agent was in fact authorized to make the mortgage, if he has not acted in the name of the principal. Neither is it ordinarily sufficient that

in the mortgage the agent describes himself as acting by virtue of a power of attorney, if in fact the agent has acted in his own name and has set his own hand and seal to the mortgage. This is especially true where the agent himself is a party to the instrument. However clearly the body of the mortgage may show and intend that it shall be the act of the principal, yet, unless in fact it is executed by the agent for and on behalf of his principal and as the act and deed of the principal, it is not valid as to the principal.(The Philippine Sugar Estates Development Co., Ltd., Inc. v. Poizat, et al., 48 Phil. 536)

2. No.Notwithstanding the nullity of the real estate mortgage executed by

Tabing and her husband, the equity principle of laches is applicable in the instant case. Laches is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. Its essential elements are: (1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (2) delay in asserting complainant’s right after he had knowledge of the defendant’s conduct and after he has an opportunity to sue; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant.In a number of cases, it had been held that laches, the essence of which is the neglect to assert a right over a long period of time, may prevent recovery of a titled property.

Records clearly show that respondents could have filed an action to annul the mortgage on their properties, but for unexplained reasons, they failed to do so. They only questioned the loan and mortgage transactions in December 1996, or after the lapse of more than five (5) years from the date of the foreclosure sale. It bears noting that the real estate mortgage was registered and annotated on the titles of respondents, and the latter were even informed of the extrajudicial foreclosure and the scheduled auction. Instead of impugning the real estate mortgage and opposing the scheduled public auction, respondents’ lawyer wrote a letter to petitioner and merely asked that the scheduled auction be postponed to a later date. Even after five (5) years, respondents still failed to oppose the foreclosure and the subsequent transfer of titles to petitioner when their agent, Tabing, acting in behalf of Cayetano, sent a letter proposing to buy back the properties. It was only when the negotiations failed that respondents filed the instant case. Clearly, respondents slept on their rights.

The complaint for annulment of mortgage and extrajudicial foreclosure with damages and cancellation of titles filed by respondents is hereby DISMISSED.

SIME DARBY PILIPINAS, INC. v. GOODYEAR PHILIPPINES, INC. G.R. No. 182148 June 08, 2011

Topic: Estoppel by Laches

FACTS

Macgraphics owned several billboards across Metro Manila and other surrounding municipalities, one of which was a 35' x 70' neon billboard located at the Magallanes Interchange in Makati City.The Magallanes billboard wasleased by Macgraphics to Sime Darby in April 1994 at a monthly rental of P120,000.00. The lease had a term of four years and was set to expire on March 30, 1998. On April 22, 1996, Sime Darby executed a Memorandum of Agreementwith Goodyear, whereby it agreed to sell its tire manufacturing plants and other assets to the latter for a total of P1.5 billion. Just a day after, on April 23, 1996, Goodyear improved its offer to buy the assets of Sime Darby from P1.5 billion to P1.65 billion. The increase of the purchase price was made in consideration, among others, of the assignment by Sime Darby of the receivables in connectionwith its billboard advertising in Makati City and Pulilan, Bulacan. On May 9, 1996, Sime Darby and Goodyear executed a Deed of Assignment through which Sime Darby assigned, among others, its leasehold rights and deposits made to Macgraphics pursuant to its lease contract over the Magallanes billboard. On September 23, 1996, due to Macgraphics' refusal to honor the Deed of Assignment, Goodyear sent Sime Darby a letter demanding partial rescission of the Deed of Assignment and the refund of P1,239,000.00, the pro-rata value of Sime Darby's leasehold rights over the Magallanes billboard.

ISSUEWhether partial rescission of the Deed of Assignment is proper

RULING

Yes.The doctrine of laches cannot be applied in this case. Laches is the

failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert it either has abandoned or declined to assert it. Because laches is an equitable doctrine,

its application is controlled by equitable considerations and should not be used to defeat justice or to perpetuate fraud or injustice.

From the records, it appears that Macgraphics first learned of the assignment when Sime Darby sent its letter-notice dated May 3, 1996.  After review, Macgraphics found that consenting to the assignment would entail the commitment of manpower and resources that it did not foresee at the inception of the lease. It thereafter communicated its non-conformity to the assignment. To the mind of the Court, there was never a delay.

In sum, it is clear that by its failure to secure the consent of Macgraphics to the assignment of lease, Sime Darby failed to perform what was incumbent upon it under the Deed of Assignment. The rescission of the Deed of Assignment pursuant to Article 1191 of the New Civil Code is, thus, justified.

GAITERO v. ALMERIA G.R. No. 181812 June 08, 2011

Topic: Estoppel by Laches

FACTS

Following a cadastral survey, a land registration court issued an original certificate of title to Rosario O. Tomagan covering a 10,741 square-meter land, Subsequently, Tomagan subdivided the lot awarded to her into four.  Tomagan waived her rights over 2 lots in favor of petitioner Feliciano Gaitero and one lot in favor of Barangay Ysulat, Tobias Fornier.  She retained one lot in her favor Lot 9960-A that went to Gaitero adjoined Lot 9964 which belonged to respondent spouses Generoso and Teresita Almeria. In June 2000, the Almerias commissioned a relocation survey of their lot and were astonished to find that Gaitero, who owned adjoining Lot 9960-A, intruded into their lot by as much as 737 sq m.

To settle the dispute, the Almerias waived their rights over a 158 sq m portion of the disputed area in Gaitero's favor but maintained their claim over the remaining 579 sq m.  Subsequently, however, Gaitero filed an affidavit of adverse claim on the Almerias' title over the remaining 579 sq m.

ISSUE

Will laches, a rule of equity, benefit one who himself slept on his supposed right?

HELD:

No.

Gaitero's theory of laches cannot vest on him the ownership of the disputed area.  To begin with, laches is a consideration in equityand therefore, anyone who invokes it must come to court with clean hands, for he who has done inequity shall not have equity.

Here, Gaitero's claim of laches against the Almerias can be hurled against him.  When the lot that the Almerias acquired was registered in 1979, Gaitero had constructive, if not actual, notice that the cadastral survey included the disputed area as part of the land that Leon Asenjo claimed.  Yet, neither Gaitero nor his mother complained or objected to such inclusion.

Worse, when Gaitero saw the subdivision plan covering Tomagan's original Lot 9960 in 1993, it showed that the disputed area fell outside the boundaries of Lot 9960-A which he claimed.  Still, Gaitero did nothing to correct the alleged mistake.  He is by his inaction clearly estopped from claiming ownership of the disputed area. He cannot avail himself of the law of equity.

KINGS PROPERTY CORP. v. GALIDOG.R. No. 170023 November 27, 2009

Topic: Estoppel by Laches

FACTS

On 18 April 1966, the heirs of Domingo Eniceo, namely RufinaEniceo and Maria Eniceo, were awarded with Homestead Patent No. 112947 consisting of four parcels of land located in San Isidro, Antipolo, Rizal (Antipolo property) The Antipolo property with a total area of 14.8882 hectares was registered under Original Certificate of Title (OCT) No. 535 .

On 10 September 1973, a deed of sale covering the Antipolo property was executed between RufinaEniceo and Maria Eniceo as vendors and respondent as vendee. RufinaEniceo and Maria Eniceo sold the Antipolo property to respondent for P250,000. A certain Carmen Aldana delivered the owner’s duplicate copy of OCT No. 535 to respondent.

Petitioner alleges that when Maria Eniceo died in June 1975, RufinaEniceo and the heirs of Maria Eniceo (Eniceo heirs), 9 who continued to occupy the Antipolo property as owners, thought that the owner’s duplicate copy of OCT No. 535 was lost.

On 5 April 1988, the Eniceo heirs registered with the Registry of Deeds of Marikina City (Registry of Deeds) a Notice of Loss dated 2 April 1988 of the owner’s copy of OCT No. 535. The Eniceo heirs also filed a petition for the issuance of a new owner’s duplicate copy of OCT No. 535 with Branch 72 of the Regional Trial Court (RTC) of Antipolo, Rizal. The case was docketed as LRC Case No. 584-A.

ISSUE

Whether the adverse claim of respondent over the Antipolo property should be barred by laches

RULING

No.

The essence of laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, through due diligence, could have been done earlier, thus giving rise to a presumption that the party entitled to assert it had either abandoned or declined to assert it.

Respondent discovered in 1991 that a new owner’s copy of OCT No. 535 was issued to the Eniceo heirs. Respondent filed a criminal case against the Eniceo heirs for false testimony. When respondent learned that the Eniceo heirs were planning to sell the Antipolo property, respondent caused the annotation of an adverse claim. On 16 January 1996, when respondent learned that OCT No. 535 was cancelled and new TCTs were issued, respondent filed a civil complaint with the trial court against the Eniceo heirs and petitioner. Respondent’s actions negate petitioner’s argument that respondent is guilty of laches.

True, unrecorded sales of land brought under Presidential Decree No. 1529 or the Property Registration Decree (PD 1529) are effective between and binding only upon the immediate parties. The registration required in Section 51 of PD 1529 is intended to protect innocent third persons, that is,

persons who, without knowledge of the sale and in good faith, acquire rights to the property. Petitioner, however, is not an innocent purchaser for value.

PAHAMOTANG v. PNBG.R. No. 156403, March 21, 2005

Topic: Estoppel by Laches

FACTS

On July 1, 1972, Melitona Pahamotang died. She was survived by her husband Agustin Pahamotang, and their eight (8) children, namely: Ana, Genoveva, Isabelita, Corazon, Susana, Concepcion and herein petitioners Josephine and Eleonor, all surnamed Pahamotang. On September 15, 1972, Agustin filed with the then Court of First Instance of Davao City a petition for issuance of letters administration over the estate of his deceased wife. The petition, docketed as Special Case No. 1792, was raffled to Branch VI of said court, hereinafter referred to as the intestate court. In his petition, Agustin identified petitioners Josephine and Eleonor as among the heirs of his deceased spouse. It appears that Agustin was appointed petitioners' judicial guardian in an earlier case - Special Civil Case No. 1785 – also of the CFI of Davao City, Branch VI. On December 7, 1972, the intestate court issued an order granting Agustin’s petition. The late Agustin then executed several mortgages and later sale of the properties with the PNB and Arguna respectively.

The heirs later questioned the validity of the transactions prejudicial to them. The trial court declared the real estate mortgage and the sale void but both were valid with respect to the other parties. The decision was reversed by the Court of Appeals; to the appellate court, petitioners committed a fatal error of mounting a collateral attack on the foregoing orders instead of initiating a direct action to annul them.

ISSUEWhether or not  petitioners’ failure to assail said orders at the most

opportune time constitutes laches

RULING

No.

In the present case, the appellate court erred in appreciating laches against petitioners. Laches is negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert it has either abandoned or declined the right. The essential elements

of laches are: (1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which complaint is made and for which the complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having had knowledge or notice of the defendant's conduct and having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred.

The element of delay in questioning the subject orders of the intestate court is sorely lacking. Petitioners were totally unaware of the plan of Agustin to mortgage and sell the estate properties. There is no indication that mortgagor PNB and vendee Arguna had notified petitioners of the contracts they had executed with Agustin. Although petitioners finally obtained knowledge of the subject petitions filed by their father, and eventually challenged the July 18, 1973, October 19, 1974, February 25, 1980 and January 7, 1981 orders of the intestate court, it is not clear from the challenged decision of the appellate court when they (petitioners) actually learned of the existence of said orders of the intestate court.

Absent any indication of the point in time when petitioners acquired knowledge of those orders, their alleged delay in impugning the validity thereof certainly cannot be established. And the Court of Appeals cannot simply impute laches against them.

VDA. DE RIGONAN v. HILARION DERECHOG.R. No. 159571 July 15, 2005

Topic: Estoppel by Laches

FACTS

In 1921, 5 out of the 8 heirs of HilarionDerecho sold the subject property to Francisco Lacambra under a pacto de retro sale, subject to a five year redemption clause. 7 years after, one of the heirs, Dolores, purchased the lot and immediately occupied it. In1980, more than 5 decades after, an Affidavit of Adjudication in favor of petitioner, TeodoroRigonan,(Dolores’ Son) was executed, declaring the petitioner’s father (Leandro Rigonan) to be the sole heir of Hilarion. During the same year, the land was mortgaged by petitioner to a bank in Cebu. Dreading foreclosure, he sold the land in favor of Valerio Laude(also a petitioner in the case) and executed a Deed of absolute Sale.In 1993, respondents, as the alleged heirs of Hilarion (3 heirs, not party to the sale in 1921), brought an action with the RTC to recover the property, annul the deed and affidavit of adjudication, whose validity was

assailed on the ground of fraud. RTC ruled in favor of the respondents and was affirmed by CA upon appeal.

ISSUE

Whether the action in the RTC was barred by prescription and laches

RULING

Yes.

Laches is defined as the failure to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it.  This equitable defense is based upon grounds of public policy, which requires the discouragement of stale claims for the peace of society.

In order to use laches as a defense, the following requisites must be present: (1)  conduct on the part of the defendant, or of one under whom a claim is made, giving rise to a situation for which a complaint is filed and a remedy sought; (2) delay in asserting the rights of the complainant, who has knowledge or notice of the defendant’s conduct and has been afforded an opportunity to institute a suit; (3)  lack of knowledge or notice on the part of the defendant that the complainant will assert the right on which the latter has based the suit; and (4) injury or prejudice to the defendant in the event that the complainant is granted a relief or the suit is not deemed barred.

The four requisites are present in the instant case.  First, the five co-owners’ act of selling the entire property deprived respondents’ predecessors of the enjoyment of their rightful shares in the inheritance.  This deprivation was the basis of the Complaint filed by respondents.

Second, respondents waited more than six decades to file a suit without offering any excuse for the long delay in the assertion of their rights.  They do not at all claim that they were unaware of their co-heirs’ actions.  They could have instituted an action to annul in 1921 or to recover the property in 1928, since they were legally presumed to know of the invalidity of the sale as to their shares; they did not have to wait for sixty-five years to institute this suit.

Third, after being allowed more than six decades of peaceful possession of the property, petitioners were certainly not expecting respondents to reclaim it.  Although Ruben Derecho warned Laude not to buy the land because it was still co-owned, the former still took no immediate action to prevent Teodoro from selling the entire property or to recover it.  Respondents even allowed nine more years to pass before rising from their stupor to institute the Complaint.

Fourth, there is no doubt that petitioners will suffer if respondents are allowed to recover the property.  The former have already developed, invested in, and religiously paid the taxes for it for at least a half-century.  On the other hand, respondents nonchalantly allowed petitioners to continue with their possession and enjoyment of the property, and then pounced upon them when the latter least expected it.

To grant respondents relief when they have not even offered any justifiable excuse for their inaction would be unjust.  It is certainly beyond our comprehension how they could have remained silent for more than 50 years.  They have only themselves to blame if the Court at this late hour can no longer afford them relief against the inequities they allegedly suffered.

Considering the undisputed facts, not only had laches set in when respondents instituted their action for reconveyance in 1993, but their right to enforce the constructive trust had already prescribed as well.

ZENAIDA M. SANTOS v. CALIXTO SANTOS,ALBERTO SANTOS, ROSA SANTOS-CARREON and ANTONIO SANTOS,

G.R. No. 133895.  October 2, 2001Topic: Estoppel by Laches

FACTS

On January 19, 1959, Jesus and Rosalia executed a deed of sale of the properties in favor of their children Salvador and Rosa.  TCT No. 27571 became TCT No. 60819.  Rosa in turn sold her share to Salvador on November 20, 1973 which resulted in the issuance of a new TCT No. 113221.  Despite the transfer of the property to Salvador, Rosalia continued to lease and receive rentals from the apartment units.

On November 1, 1979, Jesus died.  Six years after or on January 9, 1985, Salvador died, followed by Rosalia who died the following month.  Shortly after, petitioner Zenaida, claiming to be Salvador’s heir, demanded the rent from Antonio Hombrebueno, a tenant of Rosalia.  When the latter

refused to pay, Zenaida filed an ejectment suit against him with the Metropolitan Trial Court of Manila, which eventually decided in Zenaida’s favor.

On January 5, 1989, private respondents instituted an action for reconveyance of property with preliminary injunction against petitioner in the Regional Trial Court of Manila, where they alleged that the two deeds of sale executed on January 19, 1959 and November 20, 1973 were simulated for lack of consideration.  They were executed to accommodate Salvador in generating funds for his business ventures and providing him with greater business flexibility.

ISSUE

Whether or not the cause of action of Rosalia Santos and her heirs has already prescribed

RULING

No.

The complaint amounts to a declaration of nullity of a void contract which is imprescriptible.  Hence, respondents’ cause of action has not prescribed.

Neither is their action barred by laches.  The elements of laches are: 1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which the complaint seeks a remedy; 2) delay in asserting the complainant’s rights, the complainant having had knowledge or notice of the defendant’s conduct as having been afforded an opportunity to institute a suit; 3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which he bases his suit; and 4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred.

These elements must all be proved positively. As we held in the same case of Lacsamana vs. CA, cited above, the concept of laches is not concerned with the lapse of time but only with the effect of unreasonable lapse.  In this case, the alleged 16 years (date of the sale from Rosa to Salvador on November 20, 1973, up to his death on January 9, 1985, more or less twelve years had lapsed, and from his death up to the filing of the case for reconveyance in the court a quo on January 5, 1989, four years had lapsed.  In other words, it took respondents about sixteen years to file the case) of respondents’ inaction has no adverse effect on the petitioner to make respondents guilty of laches.

SIMEON B. MIGUEL, ET AL. v. FLORENDO CATALINOG.R. No. L-23072      November 29, 1968

Topic: Estoppel by Laches

FACTS

Bacaquio, who died in 1943, acquired the land when his second wife died and sold it to Catalino Agyapao, father of the defendant Florendo Catalino. Of the purchase price was paid and receipted for when the land was surveyed, but the receipt was lost; the balance was paid after the certificate of title was issued. No formal deed of sale was executed, but since the sale in 1928, or for more than 30 years, vendee Catalino Agyapao and his son, defendant-appellee Florendo Catalino, had been in possession of the land, in the concept of owner, paying the taxes thereon and introducing improvements.

On 1 February 1949, Grace Ventura, by herself alone, "sold" anew the same land for P300.00 to defendant Florendo Catalino. In 1961, Catalino Agyapao in turn sold the land to his son, the defendant Florendo Catalino.

On January 22, 1962, appellants brought suit in the Court below against Florendo Catalino for the recovery of the land above-described, plaintiffs claiming to be the children and heirs of the original registered owner, and averred that defendant, without their knowledge or consent, had unlawfully taken possession of the land, gathered its produce and unlawfully excluded plaintiffs therefrom. Defendant answered pleading ownership and adverse possession for 30 years.

ISSUE

Whether or not defendant-appelle’s contention that defense of laches applies independently of prescription is correct

RULING

Yes.

Appellee is correct in its contention that the defense of laches applies independently of prescription. Laches is different from the statute of limitations. Prescription is concerned with the fact of delay, whereas laches is concerned with the effect of delay. Prescription is a matter of time; laches is principally a question of inequity of permitting a claim to be enforced, this inequity being founded on some change in the condition of the property or the relation of the parties. Prescription is statutory; laches is not. Laches

applies in equity, whereas prescription applies at law. Prescription is based on fixed time laches is not.

In the case at bar, Bacaquio sold the land in 1928 but the sale is void for lack of the governor's approval. The vendor, and also his heirs after him, could have instituted an action to annul the sale from that time, since they knew of the invalidity of the sale, which is a matter of law; they did not have to wait for 34 years to institute suit. The defendant was made to feel secure in the belief that no action would be filed against him by such passivity, and also because he "bought" again the land in 1949 from Grace Ventura who alone tried to question his ownership; so that the defendant will be plainly prejudiced in the event the present action is not held to be barred.

VANANCIO FIGUEROA v. PEOPLE OF THE PHILIPPINESG.R. No. 147406, JULY 14, 2008

Topic: Estoppel by Laches

FACTS

Petitioner Venancio Cervantes Figueroa was charged with the crime of reckless imprudence resulting in homicide. The regional Trial Court of Bulacan found him guilty. In his appeal before the Court of Appeals, the petitioner, for the first time, questioned RTCs jurisdiction on the case. The CA in affirming the decision of the RTC, ruled that the principle of estoppel by laches has already precluded the petitioner from questioning the jurisdiction of the RTC—the trial went on for 4 years with the petit ioner act ively part ic ipating therein and without him ever rais ing the jurisdictional infirmity. The petitioner, for his part, counters that the lack of jurisdiction of a court over the subject matter may be raised at any time even for the first time on appeal. As undue delay is further absent herein, the principle of laches will not be applicable.

ISSUE

Whether or not petitioner’s failure to raise the issue of jurisdiction during the trial of this case, constitute laches in relation to the doctrine laid down in Tijam v. Sibonghanoy, notwithstanding the fact that said issue was immediately raised in petitioner’s appeal to the Court of Appeals

RULING

No.

Petitioner’s failure to raise the issue of jurisdiction during the trial of the case does not constitute laches.

Citing the ruling in Calimlim vs. Ramirez, the Court held that as a general rule, the issue of jurisdiction may be raised at any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel.

Estoppel by laches may be invoked to bar the issue of lack of jurisdiction only in cases in which the factual milieu is analogous to that of Tijam v. Sibonghanoy.Laches should be clearly present for the Sibonghanoy doctrine to be applicable, that is ,lack of jurisdiction must have been raised so belatedly as to warrant the presumption that theparty entitled to assert it had abandoned or declined to assert it.