De los Santos vs. Vibar

A person may be bound as a guarantor through implied consent and estoppel in pais, and the handwritten word “guarantor” controls the typewritten word “witness” when the signatory assents to the insertion.

Petitioner Cecilia de los Santos and respondent Priscila Bautista Vibar were former co-workers in the Medical Department of the Social Security System and had been close and trusted friends for 33 years. Cecilia introduced Jose de Leon to Priscila when de Leon needed money.

Petitioner Cecilia de los Santos and respondent Priscila Bautista Vibar were former co-workers in the Medical Department of the Social Security System and had been close and trusted friends for 33 years. Sometime in 1994, Cecilia introduced Jose de Leon to Priscila. De Leon needed money and borrowed P100,000 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%. 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, were present. After some discussion, they all agreed that the outstanding P100,000 loan together with accrued interest would be deducted from the new loan of P500,000. De Leon signed a typewritten promissory note, which he brought with him, acknowledging the debt of P500,000 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. 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” beside 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 the 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. 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, making her answer for de Leon’s debt as his guarantor. Cecilia then remitted to Priscila P15,000 to pay one month’s interest on the loan. This was the only payment Cecilia made; she 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. The Register of Deeds denied registration on several grounds: (a) the issue involved a money claim which does not fall within Section 70 of Presidential Decree No. 1529; (b) the annexes were not marked; (c) the family names of Jose and Evangeline, registered owners, do not tally with those on the title; and (d) there was no statement that there was 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. De Leon did not file an answer and was declared in default. Cecilia filed an answer denying that she signed as guarantor of de Leon’s loan.

Before the demand letters were sent, Cecilia had several meetings with Priscila and the latter’s counsel. In these meetings, Cecilia acknowledged her liability as guarantor but claimed she had no money to pay Priscila. Cecilia also wrote a letter dated May 5, 1996 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; in that letter she stated that she “appears to be a Guarantor” in the promissory note. During trial, Cecilia did not impugn the letter or its contents and in fact submitted it in evidence. The trial court found that Cecilia had no knowledge of, and did not consent to, the guaranty. The Court of Appeals, on the other hand, found that Cecilia’s conduct during the signing of the promissory note and her non-objection to the insertion of the word “guarantor” showed that she acted as guarantor, and that her nodding of her head signified consent.

• No Implied Consent: Cecilia contended that she is not liable as guarantor. Her behavior, such as allegedly “kept mum” or “nodded her head and smiled,” was not implied consent as guarantor.
• No Presumed Guaranty: She insisted 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.
• No Estoppel in pais: She argued that without such knowledge or consent, there is no estoppel in pais.

• Totality of Acts: Priscila maintained that from the totality of Cecilia’s acts, she consented to be bound as guarantor of de Leon’s loan.
• Nod and Non-Objection: 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.
• Estoppel: Even after discovering that the loan was unpaid and overdue, Cecilia did not contest that she was a guarantor and even paid partially to Priscila; she 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. Thus, Priscila insisted that Cecilia is estopped from denying that she is a guarantor.

• Liability as Guarantor: Whether Cecilia is liable as guarantor of de Leon’s loan from Priscila.
• Implied Consent: Whether Cecilia’s conduct—nodding her head, keeping silent, and not objecting to the insertion of the word “guarantor”—constituted consent to be a guarantor.
• Estoppel in pais: Whether Cecilia is estopped from denying that she is a guarantor.
• Written vs. Printed Words: Whether the handwritten word “guarantor” prevails over the typewritten word “witness” in the promissory note.

• Liability as Guarantor: Yes. Cecilia was a guarantor of de Leon’s loan; the Court of Appeals’ ruling holding her liable was affirmed.
• Implied Consent: Yes. Her nod of approval to the insertion of the word “guarantor” and her non-objection signified consent to be a guarantor.
• Estoppel in pais: Yes. Her partial payment of P15,000, her letter to the Register of Deeds, and her failure to deny liability until suit estopped her from denying the guaranty.
• Written vs. Printed Words: Yes. Under Section 15, Rule 130, the handwritten word “guarantor” prevails over the typewritten word “witness” as the latest expression of her will.

• Liability as Guarantor: The issue is a question of fact generally beyond the Supreme Court’s power of review because it is not a trier of facts. However, review is proper when the findings of the Court of Appeals are contrary to those of the trial court. Here, the trial court found that Cecilia had no knowledge of, and did not consent to, the guaranty, while the Court of Appeals found that her conduct showed she acted as guarantor. Because the findings conflicted, the Court reviewed the facts. The controversy centered on whether a contract of guaranty existed. The promissory note indicated that Cecilia signed as a witness in typewritten format, but the handwritten word “guarantor” beside her name made her a guarantor. The Court was convinced that the insertion was made with Cecilia’s express consent.
• Implied Consent: The Court relied on several circumstances. First, Cecilia’s act of nodding her head signified her assent to the insertion of the word “guarantor.” The word could have been inserted by Cecilia herself or by someone authorized by her; in either case she would be bound. By nodding, she authorized de Leon, who prepared the promissory note, to insert the word. Since de Leon made the insertion only after Atty. Bautista raised the need for Cecilia to be a guarantor, a positive or negative reaction was expected; Cecilia responded with a nod of approval. She should have immediately objected otherwise. Second, Priscila would not have extended the loan to de Leon without Cecilia’s representations. Cecilia arranged for de Leon and Priscila to meet, vouched for de Leon’s capacity to pay, took active part in the first loan of P100,000, and signed as guarantor. The first loan was paid from the proceeds of the second loan. As shown by Atty. Bautista’s intervention, Priscila would not have granted the second bigger loan of P500,000 without Cecilia’s guaranty. Third, Cecilia claimed ignorance of the guaranty only after the case was filed. Before the demand letters were sent, she had several meetings with Priscila and the latter’s counsel, where she acknowledged her liability as guarantor but claimed she had no money to pay. She also made an initial payment of P15,000 as partial compliance with her obligation as guarantor. Fourth, Cecilia wrote a letter dated May 5, 1996 to the Register of Deeds of Baguio City stating that she “appears to be a Guarantor” in the promissory note. This was a written admission that she knew she was a guarantor. She did not impugn the letter or its contents during trial and even submitted it in evidence. She wrote the letter to protect her interest, hoping that the mortgaged property could answer for de Leon’s loan and save her from personally paying as guarantor.
• Estoppel in pais: Estoppel prevents a person from adopting an inconsistent position, attitude, or action if it will result in injury to another. 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. Cecilia’s conduct in the course of the negotiations and contract signing showed that she consented to be a guarantor 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. Her partial payment of P15,000 and her letter to the Register of Deeds sustained the ruling that she affirmed her obligation as de Leon’s guarantor. Thus, she was estopped from denying that she is a guarantor.
• Written vs. Printed Words: 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 that 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 is that written words are the latest expression of the will of the parties. Thus, the latest expression of Cecilia’s will was that she signed the promissory note as guarantor.

• Guaranty May Arise from Implied Consent — A contract of guaranty is not presumed, but consent may be implied from a person’s conduct, acts, and circumstances. The Court found that Cecilia’s nod of approval to the insertion of the word “guarantor,” her non-objection, and her active role in arranging the loan established her consent to be a guarantor.
• Estoppel in pais — A person who, by acts, representations, admissions, or silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and the other rightfully relies and acts on such belief, cannot deny the existence of such fact if it will prejudice the latter. The Court applied this to Cecilia’s partial payment, her letter stating she “appears to be a Guarantor,” and her failure to deny liability until suit.
• Written Words Control Printed Words — Under Section 15, Rule 130, when an instrument consists partly of written words and partly of a printed form and the two are inconsistent, the written words control because they are the latest expression of the parties’ will. The handwritten word “guarantor” prevailed over the typewritten word “witness.”
• Review of Conflicting Factual Findings — Although the Supreme Court is not a trier of facts and questions of fact are generally beyond review, it may review factual findings when the Court of Appeals’ findings are contrary to those of the trial court. The Court applied this exception because the trial court found no consent while the Court of Appeals found a guaranty.

• “We rule that Cecilia was a guarantor of de Leon’s loan.” — This is the Court’s core holding on the main issue, resolving the conflicting factual findings in favor of the existence of a guaranty.
• “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.” — This states the evidentiary rule applied to the promissory note, making the handwritten insertion controlling over the printed designation.
• “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.” — This is the Court’s canonical formulation of estoppel in pais, which it applied to Cecilia’s conduct and partial payment.
• “Cecilia’s act of “nodding her head” signified her assent to the insertion of the word “guarantor.”” — This identifies the principal factual basis for finding implied consent to the guaranty.

• Nicolas vs. Desierto, G.R. No. 154668, 16 December 2004, 447 SCRA 154 — Cited for the rule that the Supreme Court is not a trier of facts and that questions of fact are generally beyond its power of review.
• Ong vs. Bognalbal, G.R. No. 149140, 12 September 2006, 501 SCRA 490 — Cited for the exception that questions of fact may be reviewed when the findings of the Court of Appeals are contrary to those of the trial court.
• The Insular Life Assurance Company, Ltd. vs. Court of Appeals, G.R. No. 126850, 28 April 2004, 428 SCRA 79 — Cited in Ong vs. Bognalbal for the same exception on conflicting factual findings.
• Rimasug vs. Martin, G.R. No. 160118, 22 November 2005, 475 SCRA 703 — Cited for the definition of estoppel, specifically that one who induces another to believe certain facts and the other relies thereon cannot deny such fact to the latter’s prejudice.
• Ganzon vs. Court of Appeals, 434 Phil. 626 (2002) — Cited in Rimasug vs. Martin for the same estoppel principle.

• Section 15, Rule 130, Rules of Court — Provides that when an instrument consists partly of written words and partly of a printed form, and the two are inconsistent, the former controls the latter. Applied to hold that the handwritten word “guarantor” prevails over the typewritten word “witness.”
• Section 70, Presidential Decree No. 1529 — Defines adverse claim. Cited in the facts as the provision under which Priscila attempted to register an adverse claim; the Register of Deeds denied registration because the issue involved a money claim not falling within the section. The Court did not apply it to the guaranty issue.
• Rule 45, 1997 Revised Rules of Civil Procedure — The petition for review on certiorari was filed under this Rule. It governed the mode of review from the Court of Appeals to the Supreme Court.

Puno, C.J. (Chairperson), Corona, Azcuna, and Leonardo-De Castro, JJ., concur.