Strong Fort Warehousing Corporation v. Banta
REITERATIONFacts
The Antecedents: Antonio Banta (Antonio), husband of Remedios Banta (Remedios), obtained loans from Westmont Bank for Metro Isuzu Corporation (MIC). Antonio executed a Real Estate Mortgage (REM) on conjugal properties to secure a ₱25 million loan, later amended to ₱36 million. Remedios filed a complaint to nullify the REM and loan documents, alleging her signatures were forged, as she and Antonio had been separated since 1991. She presented NBI and PNP Crime Laboratory reports stating her signatures were not by the same person. Westmont Bank claimed it was a mortgagee in good faith. Procedural History: Remedios' formal offer of evidence was unduly delayed, leading the Court of Appeals (CA) to order its expunction. This Court affirmed the CA's decision. During the pendency of appeals, trial continued. Westmont Bank presented its evidence. Remedios, in rebuttal, presented checks and receipts as proof of her genuine signature and re-submitted the expunged NBI and PNP reports, which the trial court admitted over objection. Remedios filed another complaint to nullify a 2000 REM and promissory notes, again alleging forgery. The trial court ruled in favor of Remedios in both cases, declaring the REMs and promissory notes void as to her. Westmont Bank appealed to the CA, which affirmed the trial court's decisions but reduced damages. Onshore Strategic Assets, Inc. (Onshore) substituted Westmont Bank, and Strong Fort Warehousing Corporation (Strong Fort) moved to substitute Onshore. The Petition: Strong Fort filed a Petition for Review on Certiorari, assailing the CA's decision for admitting Remedios' expunged rebuttal evidence and arguing that the opinions of handwriting experts became hearsay. Strong Fort also questioned the admission of BPI checks and promissory notes in rebuttal, the validity of the notarized REMs, and the award of damages. Strong Fort contended that the REMs should remain valid for Antonio's share and that the nullity of mortgages does not affect the principal loan contracts.
Issue(s)
Whether the CA erred in affirming the trial court's admission of Remedios' rebuttal evidence, specifically the expunged NBI and PNP Crime Laboratory reports. Whether the opinions of handwriting experts became hearsay and baseless due to the expunction of the NBI and PNP reports. Whether the admission of BPI checks and promissory notes as rebuttal evidence was proper. Whether the 1995 REM and its amendment are presumed valid due to notarization, and whether Remedios was guilty of inexcusable negligence for failing to file an action for judicial separation of property. Whether the REMs should remain valid with respect to Antonio's share of the conjugal properties. Whether the nullification of the deeds of mortgage affects the validity of the promissory notes.
Ruling
The petition is denied. The Court affirmed the CA's decision, declaring the REMs and promissory notes void with respect to Remedios due to forged signatures, but modified the awards of moral and exemplary damages.
Ratio Decidendi
On the admission of expunged rebuttal evidence: The Court reiterated that evidence ordered expunged from the records cannot be considered for any purpose, as it is deemed non-existent. However, it clarified that while the NBI's Questioned Documents Report (QDR) and the PNP Crime Laboratory Report were expunged, they were not the sole bases for the trial court's conclusion of forgery. The Court emphasized that forgery must be proven by clear, positive, and convincing evidence, and the burden of proof lies with the party alleging it. The best evidence of forgery is a comparison between the alleged forged signature and the authentic signature. On the opinions of handwriting experts: The Court held that the testimonies of handwriting experts were not hearsay nor baseless, even with the expunction of the NBI and PNP reports. The experts' opinions, based on their special knowledge and training, can stand on their own and do not depend on the expunged documents for their competence and probative value. They personally scrutinized and compared the disputed signatures with authentic ones, detailing significant differences in writing characteristics, movement, and manner of execution. On the admission of BPI checks and promissory notes as rebuttal evidence: The Court agreed with Strong Fort that the admission of these documents as rebuttal evidence was not justified, as they constituted direct proof of forgery and should have been presented as evidence in chief. However, the Court noted that Westmont Bank did not raise this issue on appeal to the CA, and it was being raised for the first time in the petition before the Supreme Court. The Court reiterated the rule that no question will be considered on appeal if it was not raised in the lower courts. On the validity of notarized REMs and Remedios' alleged negligence: The Court found Strong Fort's argument that the REMs are presumed valid due to notarization to be without merit in light of the forgery. Regarding Remedios' alleged negligence, the Court stated that no law obliges a spouse to file for judicial separation of property to protect her interest, as her interest is already protected by law. It was the bank that failed to exercise the required caution in ascertaining the identity of the mortgagor and the genuineness of her signature. On the validity of REMs for Antonio's share: The Court ruled that even if Antonio mortgaged only his portion of the conjugal partnership, the mortgage is theoretically void because his right to one-half of the conjugal assets does not vest until the liquidation of the partnership. Since the marriage was existing and the partnership not dissolved when the mortgages were executed, it was impossible to determine which assets belonged to Antonio. On the validity of the promissory notes despite the nullity of the REMs: The Court clarified that the nullity of the REMs, being accessory contracts, does not invalidate the principal loan obligation embodied in the promissory notes executed by Antonio. The mortgage deeds, though void, remain as evidence of the indebtedness, which can be enforced in an ordinary action.
Main Doctrine
The testimony of the person whose signature is disputed has probative value and may be admitted in evidence to prove forgery, even if documentary evidence like expert reports were expunged from the records. Furthermore, the nullity of a real estate mortgage due to forged signatures does not invalidate the principal loan obligation.