CARLOS CAJUCOM, SUBSTITUTED BY HIS CHILDREN, GENOVEVA CAJUCOM AND ALBERTO CAJUCOM, PLAINITFF-APPELLEE, VS. PRODUCERS RURAL BANK OF SAN JOSE CITY (N.E.), DEFENDANT-APPELLANT.

Cajucom versus Producers Rural Bank of San Jose City

The Case

This is an appeal by Producers Rural Bank of San Jose City from a judgment of the Regional Trial Court of Cabanatuan City annulling a Special Power of Attorney, a Real Estate Mortgage, and the foreclosure sale that followed. The action was originally brought by Carlos Cajucom, later substituted by his children Genoveva Cajucom and Alberto Cajucom, against the bank and the spouses Virgilio and Concordia Cajucom. The case matters because it gathers in one decision the rules a Bar candidate must know on forgery, on the burden of proving a forged signature, on the probative value of handwriting comparison, and on the effect of a void mortgage executed by one who holds no authority from the registered owner.

Procedural History

Carlos Cajucom filed the complaint for annulment of mortgage, foreclosure of mortgage, and annulment of the certificate of sale, with damages and attorney's fees, before the Regional Trial Court of Cabanatuan City. During the pendency of the case Carlos died and was substituted by his children Genoveva Cajucom and Alberto Cajucom. The trial court rendered judgment in favor of the plaintiffs, declaring the Special Power of Attorney and the Real Estate Mortgage null and void, annulling the foreclosure proceedings, and declaring the consolidated title in the name of the bank null and void. On the bank's motion for reconsideration, the trial court modified its decision, so that instead of restoring the title to Carlos, it ordered the spouses Virgilio and Concordia Cajucom to pay their outstanding obligation to the bank with legal interest of twelve percent per annum from the filing of the case until fully paid. The bank then brought this appeal, assigning as errors the annulment of the mortgage and foreclosure sale despite the absence of convincing evidence that Carlos had no participation, the alleged benefit derived by the mortgagor and his children from the loan proceeds, the plaintiffs' offer to pay as an admission of liability, and the reliance on the testimony of Genoveva Cajucom. The appeal reached the Supreme Court, which affirmed the trial court.

Facts

Carlos Cajucom owned a parcel of land in Aliaga, Nueva Ecija. Sometime in 1996, Concordia Cajucom, the wife of Carlos's son Virgilio, borrowed the owner's title from Genoveva on the pretext of determining each child's share in the property. Genoveva gave it without suspicion. When Genoveva asked for its return in 1999, Concordia kept putting her off. In 2000 the family discovered that the property had been mortgaged to Producers Rural Bank of San Jose City, and by then Virgilio and Concordia had left the locality.

It turned out that on August 14, 1997, Virgilio, purporting to act under a Special Power of Attorney, executed a Real Estate Mortgage in favor of the bank to secure a loan of 300,000 pesos. The loan was not paid at maturity, the mortgage was foreclosed, and at the public auction the bank emerged as the highest bidder. A Certificate of Sale was issued in its favor on August 15, 2001 and annotated at the back of the title. The redemption period lapsed without redemption, and only on July 13, 2007, during the pendency of the case, was title issued in the name of the bank.

Carlos disowned the Special Power of Attorney, denied his signature, and claimed it was forged. Genoveva testified that she was familiar with her father's signature, that the signature on the Special Power of Attorney was markedly different, and that her father never wrote his middle initial in his signature. The National Bureau of Investigation examined the document and concluded that the questioned and sample signatures were not written by one and the same person. The bank, for its part, presented the notary public, who admitted he could not say with certainty that the person named in the Special Power of Attorney personally appeared before him, and a bank representative who admitted she never met Carlos and relied only on the documents.

Issues

• Whether or not the signature of Carlos Cajucom in the Special Power of Attorney was forged.
• Whether or not the Real Estate Mortgage and the foreclosure sale are void in the absence of a valid special power of attorney from the registered owner.
• Whether or not the bank may still recover the loan obligation from the spouses Virgilio and Concordia Cajucom.

Applicable Provisions

Section 22, Rule 132 of the Revised Rules on Evidence provides:

Evidence respecting the handwriting may also be given by a comparison, made by the witness or the court, with writings admitted or treated as genuine by the party against whom the evidence is offered, or proved to be genuine to the satisfaction of the judge.

This provision authorized both the National Bureau of Investigation expert and the court itself to compare the questioned signature with genuine specimens, and it supplied the legal basis for the Court's own visual examination of the signatures.

Ruling

On the first issue, the Court held that forgery cannot be presumed; it must be proved by clear, positive, and convincing evidence, and the burden of proving forgery lies on the one who alleges it. The plaintiffs discharged that burden. Genoveva testified from personal familiarity with her father's signature, and the National Bureau of Investigation expert testified that the structural pattern and formation of the letters were different, that the questioned signature showed no variation in pen pressure, and that the signatures were not written by one and the same person. The bank's evidence, far from disproving forgery, cast more doubt, because the notary public could not say with certainty that Carlos personally appeared before him. The Court also compared the questioned signature with Carlos's signatures in his Voter's Affidavit written just days after the Special Power of Attorney, and found them strikingly dissimilar. The Court concluded that the signature in the Special Power of Attorney was a forgery, and that the signature in the Real Estate Mortgage was likewise forged.

On the second issue, the Court held that a forged Special Power of Attorney confers no right whatsoever. Virgilio had no authority to mortgage the property owned by his father, and in the absence of a special power of attorney no valid mortgage could be executed. The mortgage was therefore void, and the foreclosure proceedings and the consolidated title in the name of the bank were likewise void.

On the third issue, the Court held that the bank was not without recourse. The loan was covered by a Promissory Note under which the spouses Virgilio and Concordia Cajucom promised to pay 300,000 pesos with nine percent interest per annum, and the bank's manager testified that the loan remained unpaid. The spouses were therefore ordered to pay their outstanding obligation with legal interest of twelve percent per annum from the filing of the case until fully paid. The Court added that Virgilio's share by way of inheritance could not be resolved in this case because it was not an issue litigated.

Doctrine

Forgery is never presumed; it must be proved by clear, positive, and convincing evidence, and the burden rests on the party alleging it. Handwriting may be compared by a witness or by the court itself with writings admitted or proved to be genuine, and such comparison is a rational method of investigation whose similarities and dissimilarities have probative value. A notary public's failure to recall that the signatory personally appeared before him weakens, rather than strengthens, the document's due execution. A Special Power of Attorney that is forged confers no authority, and a mortgage executed by one who is not the owner and holds no valid power of attorney is void, carrying with it the foreclosure sale and any title consolidated in the buyer's name. The registered owner's title is restored, while the borrower remains liable on the promissory note that evidences the loan.

Disposition

The Supreme Court affirmed the decision of the trial court. The plaintiffs won: the Special Power of Attorney, the Real Estate Mortgage, the foreclosure proceedings, and the consolidated title in the bank's name were annulled, and the spouses Virgilio and Concordia Cajucom were ordered to pay their outstanding obligation to the bank with legal interest of twelve percent per annum from the filing of the case until fully paid.

Remember This

Memorize the line that forgery cannot be presumed and must be proved by clear, positive, and convincing evidence, and that a forged Special Power of Attorney confers no authority, so the mortgage built on it is void. Examiners use this case on the burden of proving forgery, on handwriting comparison under the Rules on Evidence, and on the effect of a void mortgage on the foreclosure sale and the consolidated title.