BPI v. Cordoba
REITERATIONFacts
1. The Antecedents: In 1992, Angela Cordoba (Angela), an elderly widow, executed a Special Power of Attorney (SPA) in favor of Spouses Sayson, authorizing them to obtain loans from Far East Bank and Trust Company (FEBTC) and use her residential lot as collateral. A PHP 200,000.00 loan was obtained in 1992, secured by a mortgage on Angela's property. Angela claimed this loan was fully settled by July 1993, and the mortgage was cancelled in September 1993. However, in 1994, FEBTC (now Bank of the Philippine Islands or BPI) informed Angela's son of an impending foreclosure due to an unpaid 1993 Loan of PHP 950,000.00, purportedly secured by a second mortgage (1993 Mortgage). Angela denied executing the 1993 Mortgage or receiving any proceeds, alleging that her signatures were forged. 2. Procedural History: Angela filed a Complaint for declaration of nullity of the 1993 Mortgage. The Regional Trial Court (RTC) dismissed the complaint, ruling that the SPA granted the Spouses Sayson broad authority to obtain "any loan" and that Angela failed to prove forgery. On appeal, the Court of Appeals (CA) reversed the RTC, declaring the 1993 Mortgage null and void. The CA reasoned that the loan secured by the 1993 Mortgage had already been paid according to bank records, and that the SPA's authority was exhausted upon the settlement of the first loan. 3. The Petition: BPI filed a Petition for Review on Certiorari under Rule 45, arguing that: (a) the 1992 Mortgage contained a valid "dragnet clause" securing all future indebtedness; (b) the SPA's plain language authorized multiple loans; and (c) the 1992 Loan was only settled using the proceeds of the 1993 Loan, thus the mortgage should extend to the latter. BPI maintained that the 1993 Mortgage was validly executed and annotated.
Issue(s)
Whether the 1993 Mortgage is null and void due to the forgery of Angela Cordoba's signature.
Ruling
The Petition is DENIED. The Real Estate Mortgage dated September 23, 1993, is DECLARED NULL and VOID.
Ratio Decidendi
On Issue 1: The Supreme Court held that the 1993 Mortgage is null and void because the signatures of Angela Cordoba were forged. The Court clarified that since the 1993 Mortgage instrument was purportedly executed by Angela herself and not by her agents, the issue of the Spouses Sayson's authority under the Special Power of Attorney (SPA) was immaterial. The decisive question was whether Angela voluntarily entered into the contract. Applying Rule 132, Section 22 of the Revised Rules of Court, the Court conducted an independent comparison between Angela's undisputed signature on the 1992 Mortgage and the contested signatures on the 1993 Mortgage. The Court found "marked differences" that were "unmistakably discernible," noting that the genuine signature featured rounded and fluid strokes, while the forged signature exhibited sharp and jagged lines. Specific discrepancies were identified in the loops and tails of the letters "l", "C", "o", "r", and "g". Consequently, the Court concluded that the 1993 Mortgage was an absolutely simulated contract under Article 1346 of the Civil Code. As a void contract, it produces no civil effect and cannot serve as a basis for BPI's claim or foreclosure rights.
Main Doctrine
The Supreme Court establishes that when a mortgage instrument is assailed on the ground of forgery, the decisive inquiry is the voluntary execution by the principal, rendering any discussion on the scope of an agent's authority under a Special Power of Attorney (SPA) moot. Forgery in a contract of mortgage results in an absolutely simulated contract which, under Article 1346 of the Civil Code, is void and produces no legal effect. Furthermore, the Court reaffirms its power under Rule 132, Section 22 of the Rules of Court to perform an independent comparison of signatures to conclude forgery based on discernible discrepancies in stroke, fluidity, and letter formation, even without the aid of handwriting experts.