G.R. No.

150931              July 16, 2008

DR. CECILIA DE LOS SANTOS, Petitioner,

vs.
DR. PRISCILA BAUTISTA VIBAR, Respondent.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review on certiorari1 assailing the Decision2 dated 29 June 2001
and Resolution3 dated 21 November 2001 of the Court of Appeals in CA-G.R. CV No. 66605.

The Facts

Petitioner Cecilia de los Santos (Cecilia) and respondent Priscila Bautista Vibar (Priscila) were
former co-workers in the Medical Department of the Social Security System. They were close
and trusted friends for 33 years.

Sometime in 1994, Cecilia introduced Jose de Leon (de Leon) to Priscila. De Leon needed
money and borrowed ₱100,000 from Priscila. De Leon issued a promissory note dated 2 June
1994 and bound himself to pay the loan three months from date with a monthly interest rate of
3%.4 Cecilia signed as a guarantor of de Leon’s loan.

On 28 June 1995, de Leon asked Priscila for another loan. Together with Cecilia and Avelina
Conte, de Leon went to Priscila’s house. Priscila and her sister, Atty. Josefina Bautista (Atty.
Bautista), were present in the same gathering. After some discussion, they all agreed that the
outstanding ₱100,000 loan together with the accrued interest would be deducted from the new
loan of ₱500,000.5

De Leon signed a typewritten promissory note, which he brought with him, acknowledging the
debt of ₱500,000 payable within 12 months from 28 August 1995, at a fixed monthly interest
rate of 3% and a penalty of 2% per month in case of default.6 Then, Cecilia signed as a witness
under the phrase "signed in the presence of." However, Atty. Bautista brought up the need for
Cecilia to sign as guarantor. Thereupon, de Leon, in his own handwriting, inserted the word
"guarantor" besides Cecilia’s name, as Cecilia nodded her head to what de Leon was doing. De
Leon also added the phrase, "as security for this loan this TCT No. T-47375, Registry of Baguio
City, is being submitted by way of mortgage."

On maturity date, de Leon failed to pay any of the monthly installments. Priscila made several
verbal demands on de Leon for payment but to no avail. Priscila’s counsel then sent de Leon a
demand letter dated 17 July 1996 asking for payment of the principal loan with interest and
penalties.7 De Leon failed to respond. On 4 September 1996, Priscila’s counsel again sent a
demand letter not only to de Leon as principal debtor, but also to Cecilia.8 Cecilia was being
made to answer for de Leon’s debt as the latter’s guarantor. Cecilia then remitted to Priscila
₱15,000 to pay one month’s interest on the loan.9 However, this was the only payment Cecilia
made to Priscila as Cecilia claimed she had no money to pay the full amount of the loan.

After several failed attempts to collect the loan, Priscila filed with the Registry of Deeds of
Baguio City an adverse claim on the property registered under TCT No. T-47375. However, the
Register of Deeds denied the registration of Priscila’s claim on several grounds:10

(a) the issue involved is a money claim which does not fall within Section 70 of
Presidential Decree No. 1529;11

(b) the annexes were not marked;

(c) the family names of Jose and Evangeline, registered owners, do not tally with those
on the title;12 and

(d) there is no statement that there is no other provision in the Property Registration
Decree for registering the same.

On 20 November 1996, Priscila filed an action for recovery of money with the Regional Trial
Court of Quezon City, Branch 100, against de Leon and Cecilia.13 De Leon did not file an answer
and the trial court declared him in default. Cecilia, on the other hand, filed an answer denying
that she signed as guarantor of de Leon’s loan.

On 26 November 1999, the trial court ruled in favor of Cecilia and dismissed the complaint for
insufficiency of evidence.14 On 12 January 2000, Priscila filed a Motion for Reconsideration on
the grounds that the trial court erred in (a) dismissing the complaint against de Leon despite his
being declared in default; and (b) finding that Cecilia was not a guarantor of de Leon’s loan.

In an Order dated 8 February 2000,15 the trial court modified its decision and ruled that de Leon
acted fraudulently or in bad faith in refusing to pay his debt to Priscila. However, the trial court
affirmed its decision dismissing the complaint against Cecilia. The trial court ruled that there was
no express consent given by Cecilia binding her as guarantor. The dispositive portion of the
Order provides:

WHEREFORE, in view of the foregoing, the Decision of the Court dated November 26, 1999, is
hereby amended as follows:

WHEREFORE, judgment is hereby rendered in favor of plaintiff Dra. Priscila Vibar and against
defendant Jose de Leon, and hereby orders the latter to pay the plaintiff the following amounts:

(1) ₱500,000.00 representing the total amount of the loan extended with interest at 3%
per month and penalty of 2% per month (due to default) from July 17, 1996 until the
obligation is fully paid;

(2) ₱30,000.00 representing moral damages;

 (3) ₱20,000.00 representing attorney's fees; and

(4) costs of suit.

Further, the Court hereby DISMISSES the instant complaint against defendant Dra. Cecilia de
los Santos for insufficiency of evidence. No pronouncement as to costs.

SO ORDERED.

Priscila filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No. 66605.

The Ruling of the Court of Appeals

On 29 June 2001, the appellate court affirmed the trial court’s ruling against de Leon but
modified the same with respect to Cecilia.16 The appellate court declared Cecilia as guarantor of
de Leon’s loan. The relevant portions of the Decision state:

x x x The conduct of defendant-appellee de los Santos during the signing, however, belies her
intention to act merely as a witness. It cannot be gainsaid that she did not react when she heard
Atty. Bautista’s protest about her signing the promissory note in the capacity only of a witness
and not as a guarantor. Neither did defendant-appellee de los Santos object when defendant-
appellee de Leon got back the promissory note and wrote the word "guarantor" after her
signature in full view of all those present, including defendant-appellee de los Santos. In fact,
said appellee nodded, signifying approval, when defendant-appellee de Leon placed the word
"guarantor" after her signature on the promissory note.

xxxx

In this factual milieu, if defendant-appellee de los Santos intended only to sign as a witness, she
should have reacted when the word "guarantor" was written on the note in her presence. She
should have expressed her strong and firm objections to such imposition of liability. But
defendant-appellee de los Santos kept mum. Such silence can lead to no other conclusion that she
has impliedly given her consent to be the guarantor of de Leon’s loan.

Moreover, defendant-appellee de los Santos is estopped from claiming otherwise. Estoppel in

pais arises x x x.

Moreover, one can imply from defendant-appellee de los Santos’ letter dated May 5, 1996
addressed to the Register of Deeds, City of Baguio that defendant-appellee de los Santos agreed
to be bound as guarantor x x x.

It is significant to note that she made no statement therein repudiating her having signed the
same in the capacity of a guarantor, contrary to what she now claims in her defense. Her failure
to correct or refute such statement reinforces the claim that indeed she guaranteed payment of the
loan in question, and that writing was to her interest considering her liabilities under the note as
guarantor.
x x x Thus, defendant-appellee de los Santos can be compelled to pay plaintiff-appellant Vibar
the judgment debt if it remains unsatisfied after execution is enforced against the properties of
the principal debtor, defendant-appellee Jose de Leon. x x x

Cecilia filed a Motion for Reconsideration which the appellate court denied in a Resolution dated
21 November 2001.17

Hence, this petition.

The Issue

The main issue for resolution is whether Cecilia is liable as guarantor of de Leon’s loan from
Priscila.

Cecilia contends that she is not liable as guarantor. Her behavior, as when she allegedly "kept
mum" or "nodded her head and smiled," was not an implied consent as guarantor. She insists that
the law is clear that a guaranty is not presumed and that there must be a concrete positive act of
acceptance or consent to the guaranty. Thus, without such knowledge or consent, there is no
estoppel in pais.

Priscila, on the other hand, maintains that from the totality of Cecilia’s acts, she consented to be
bound as guarantor of de Leon’s loan. Her nod of approval and non-objection to the insertion of
the word "guarantor" at the signing of the second promissory note show that she agreed to be a
guarantor, just like in the first promissory note. Even after discovering that the loan was unpaid
and already overdue, Cecilia did not contest that she was a guarantor and even paid partially to
Priscila. Instead, Cecilia claimed she had no money to pay the entire loan. It was only after the
case was filed that Cecilia challenged the insertions in the promissory note. Hence, Priscila
insists that Cecilia is estopped from denying that she is a guarantor.

The Court’s Ruling

The issue before us is a question of fact, the determination of which is beyond this Court’s power
of review for it is not a trier of facts.18 However, there are instances when questions of fact may
be reviewed by this Court, as when the findings of the Court of Appeals are contrary to those of
the trial court.19 In the present case, the trial court and the Court of Appeals made conflicting
findings of fact. Thus, a review of such factual findings is in order.

Here, the controversy centers on whether there exists a contract of guaranty to hold Cecilia liable
for the loan of de Leon, the principal debtor. The trial court found that Cecilia had no knowledge
of, and did not consent to, the guaranty. On the other hand, the appellate court ruled that
Cecilia’s conduct during the signing of the promissory note and her non-objection to the
insertion of the word "guarantor" show that she acted as guarantor. Cecilia’s nodding of her head
upon the insertion of the word "guarantor" signified her consent to be a guarantor.

We rule that Cecilia was a guarantor of de Leon’s loan.

Cecilia denies that she had actual knowledge of the guaranty. However, Priscila points to the
promissory note and Cecilia’s actions as the best evidence to prove that Cecilia signed as
guarantor. The promissory note indicates that Cecilia signed as a witness, as manifested by the
typewritten format. However, the word "guarantor" as handwritten beside Cecilia’s name makes
Cecilia a guarantor. From the records of the case and the evidence presented, we are convinced
that the insertion was made with the express consent of Cecilia.

Firstly, Cecilia’s act of "nodding her head" signified her assent to the insertion of the word
"guarantor." The word "guarantor" could have been inserted by Cecilia herself, or by someone
authorized by Cecilia. In either case, Cecilia would be bound as guarantor. In this case, Cecilia,
by nodding her head, authorized de Leon, who prepared the promissory note, to insert the word
"guarantor." Since de Leon made the insertion only after Atty. Bautista had raised the need for
Cecilia to be a guarantor, a positive or negative reaction was expected from Cecilia, who
responded by giving her nod of approval. Otherwise, Cecilia should have immediately expressed
her objection to the insertion of the word "guarantor." Cecilia’s act of nodding her head showed
her consent to be a guarantor.

Secondly, Priscila would not have extended a loan to de Leon without the representations of
Cecilia. Cecilia arranged for de Leon and Priscila to meet so that de Leon could borrow money
from Priscila. Cecilia vouched for de Leon’s capacity to pay. As a friend and common link
between the borrower and lender, Cecilia took active part in the first loan of ₱100,000 and even
signed as guarantor. On the second promissory note, the word "guarantor" again appears,
admitted by both Cecilia and Priscila as an insertion made by de Leon at the time of signing. The
first loan of ₱100,000, which Cecilia guaranteed, was paid from the proceeds of the second loan.
As shown by the intervention of Atty. Bautista in bringing up the need for Cecilia to act as
guarantor, Priscila would not have granted the second bigger loan of ₱500,000 without the
guaranty of Cecilia. It was only natural for Priscila to commit to the second bigger loan subject at
least to the same guarantee as the first smaller loan.

Thirdly, Cecilia claimed ignorance of the guaranty only after this case was filed. However, the
records show that Cecilia had several meetings with Priscila and the latter’s counsel before the
demand letters were sent.20 In these meetings, Cecilia acknowledged her liability as guarantor but
simply claimed that she had no money to pay Priscila.21 In fact, Cecilia made an initial payment
of ₱15,000 as partial compliance of her obligation as guarantor. This only shows that Cecilia
never denied her liability to Priscila as guarantor until this case was filed in court.

Lastly, Cecilia wrote a letter to the Register of Deeds of Baguio City inquiring on the status of
the property mentioned in the promissory note as a mortgage security for de Leon’s loan.22 The
letter states:

May 5, 1996

The Register of Deeds

City of Baguio

Sir:
This is relative to a "Promissory Note" dated June 28, 1995 x x x.

In the aforestated "Promissory Note", the undersigned appears to be a "Guarantor" and it is a

condition therein that "as security for this loan this TCT No. 47375, Registry of Baguio City, is
being submitted, by way of mortgage". However, information has been received that said
registered owners, individually or collectively, have executed and filed with your Office an
"affidavit of loss" of said duplicate owner’s copy. If such information is correct, may I request
for a "certification" to said effect, and possibly, a certified true copy of such document.

xxxx

Here, Cecilia clearly stated that she "appears to be a guarantor" in the promissory note. This
serves as a written admission that Cecilia knew she was a guarantor. During the trial, Cecilia did
not impugn the letter or its contents. In fact, Cecilia submitted this letter in evidence.23 Cecilia
wrote the Register of Deeds to protect her interest, hoping that the property covered by TCT No.
T-47375 could answer for de Leon’s loan and save her from personally paying as guarantor. This
explains Cecilia’s letter admitting that she appears as a guarantor in the promissory note.

It is axiomatic that the written word "guarantor" prevails over the typewritten word "witness." In
case of conflict, the written word prevails over the printed word. Section 15 of Rule 130
provides:

Sec. 15. Written words control printed. - When an instrument consists partly of written words
and partly of a printed form, and the two are inconsistent, the former controls the latter.

The rationale for this rule is that the written words are the latest expression of the will of the
parties.1avvphi1 Thus, in this case, the latest expression of Cecilia’s will is that she signed the
promissory note as guarantor.

We agree with the Court of Appeals that estoppel in pais arose in this case. Generally, estoppel is
a doctrine that prevents a person from adopting an inconsistent position, attitude, or action if it
will result in injury to another.24 One who, 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,
can no longer deny the existence of such fact as it will prejudice the latter.25

Cecilia’s conduct in the course of the negotiations and contract signing shows that she consented
to be a guarantor of the loan as witnessed by everyone present. Her act of "nodding her head,"
and at the same time even smiling, expressed her voluntary assent to the insertion of the word
"guarantor" after her signature. It is the same as saying that she agreed to the insertion. Also,
Cecilia’s acts of making the partial payment of ₱15,000 and writing the letter to the Register of
Deeds sustain the ruling that Cecilia affirmed her obligation as de Leon’s guarantor to the loan.
Thus, Cecilia is now estopped from denying that she is a guarantor.

WHEREFORE, we DENY the petition. We AFFIRM the 29 June 2001 Decision and 21
November 2001 Resolution of the Court of Appeals in CA-G.R. CV No. 66605.
SO ORDERED.

ANTONIO T. CARPIO
Associate Justice