SANTOS GUINSATAO AND PACITA GUINSATAO, PETITIONERS, VS. THE HON. COURT OF APPEALS, BATAAN DEVELOPMENT BANK, JEREMIAS DELA CRUZ, AND ANTONIO PEREZ, RESPONDENTS.

This petition assails the decision dated June 14, 1990 of
respondent Court of Appeals in CA-G.R. CV No. 148336 reversing the decision of
the Regional Trial Court of Quezon City, Branch XIX, in favor of the plain­tiffs
now petitioners in Civil Case No. Q-41225 (except the part dismissing their
counterclaims).

The following are the facts stated in the decision of the Court of
Appeals:

On March 9, 1982, the plain­tiffs spouses Santos and Pacita
Guinsatao, the latter acting for herself and as attorney-in-fact of the
defendant Hospicio Framo, ap­plied with the defendant bank for a loan of
P225,000.00 to be used as working capital in a general market­ing
business. The loan was approved by the
board of directors of the bank.

On March 29, 1982, the plain­tiffs-spouses (petitioners herein),
for themselves and the plaintiff Pacita Guinsatao as attorney-in-fact of the
defendant Hospicio Framo, executed a real estate mortgage in favor of the
defendant bank on the house and lot located at No. 122 Aramismis St., Project
7, Quezon City, covered by TCT No. 205830, issued in the name of the defendant
Framo, to secure the payment of the obligation.

On April 14, 1982, Jeremias Dela Cruz, Chairman of the Board of
Directors of the Bataan Development Bank, informed petitioners of the approval
of the loan. A demand draft in the
amount of P207,138.82 bearing No. 1217, dated April 14, 1982, was issued to
Pacita Guinsatao upon her written request. She indorsed it by affixing her signa­ture at the dorsal side thereof
and returned it to Dela Cruz, who indorsed and deposited it in his personal
account. Receipt of the bank draft was
acknowledged by the plaintiff, Pacita Guinsatao, below the discount statement
on the dorsal side of which the amount of the loan, its term, manner of
payment, amortization, and interest rate are written.

On February 16, 1984, Atty. Salvador B. F. Aquino, in behalf of the
plaintiffs spouses, wrote the bank demanding the return of their mortgage
transfer certificate of title and the cancellation of the encumbrance thereon,
inasmuch as the proceeds of the loan were allegedly not released to the
borrowers (Exhibit W).

The bank replied that the loan had been approved and the proceeds
released to, and received by, the plaintiff, Pacita Guinsatao, and the
corresponding promissory note had been duly signed by her and her spouse
(Exhibit Y).

The plaintiffs spouses claimed that the signatures in the promisso­ry
note (Exhibit C) were not theirs and, therefore, forged. They reit­erated their demand for the return
of the title to their house and lot and for the cancellation of the mortgage
thereon.

On February 28, 1985, after examination by Senior Document Examiner
Rhoda B. Flores of the National Bureau of Investigation, upon referral by the
Court, it was found that the plaintiffs spouses’ signatures on the promissory
note (Exhibit C) were not theirs, hence, forged.

On January 20, 1987, the trial court rendered a decision in favor
of the plaintiffs (herein petitioners), the dispositive portion of which reads
:

“ACCORDINGLY, judgment is hereby rendered as follows:

“1. Declaring the promissory note, Exhibit C,
and the mortgage contract, Exhibit D, to be null and void;

“2. Ordering the Register of Deeds of Quezon
City to cancel the annotations of said mortgage at the back of TCT No. 145218
in the name of Santos Guinsatao, and TCT No. 205830 in the name of Hospicio
Framo, both in the copies on file in the said register of deeds as well as on
the owner’s duplicate copies thereof;

“3. Ordering the Register of Deeds of Quezon
City to return to the plaintiffs-spouses Santos Guin­satao and Pacita
Guinsatao, TCT Nos. 145218 and 205830, free from all liens and encumbrances;

“4. Ordering defendant Jere­mias dela Cruz to
pay to the plain­tiffs-spouses: P130,000.00, in moral damages; P15,000.00, in
exem­plary damages; and, P10,000.00, in reasonable attorney’s fees;

“5. The temporary injunction issued on June 29,
1984, enjoining defendant bank and the Ex-officio (sic) Sheriff of
Quezon City, par­ticularly Sr. Deputy Sheriff Marino V. Cachero, their agents,
represen­tatives and all those acting for and in their behalves, from selling
at public auction plaintiffs-spouses’ properties mentioned in the Notice of
Extrajudicial Sale dated May 8, 1984, is made permanent;

“6. The counterclaims of the defendants are
dismissed.

“With costs against defendant Jeremias dela Cruz.” (pp.
43-44, Rollo.)

The bank appealed to the Court of Appeals. On June 14, 1990, the Court of Appeals
rendered judgment reversing the decision of the Regional Trial Court of Quezon
City and dismissing the complaint.

Hence, this petition for review by the spouses Guinsatao
assigning errors against the decision of the appellate court, which boil down
to whether or not the loan of P225,000.00 secured by a real estate mortgage on
the properties of the petitioners and Framo, had been received by the
petitioners.

In finding that the loan was received by the petitioners
notwithstanding the absence of a promissory note duly signed by them (for the
promissory note in the records, is fake), the Court of Appeals made the follow­ing
observations:

“While it is true that the appellees spouses’ signatures to
the promissory note (Exhibit C) are not theirs, hence forged, yet they cannot
avoid payment of their obli­gation to the appellant bank.

“The appellees spouses Santos and Pacita Guinsatao, the latter
acting for herself and as attorney-in-fact of the defendant Framo, applied for
a loan of P225,000.00 with the appellant bank, said amount to be used as
working capital in a general marketing business (Exhibit N-1, pp. 22-23, rec.,
Exhibit O). Said loan applied for was
approved by the board of directors of the appellant bank (Exhibit 10-dela
Cruz). The proceeds thereof
in the net amount of P207,138.82, after
deducting the interest for three months,
3% bank charge for one year and insurance
premium in the total amount of P17,861.18,
was received by the appellee Pacita Guinsatao,
as evi­denced by the bank draft
(Exhibits N-2 and N-3, pp. 25-A, 104, rec.; N?4, 3, 3-A-bank; p. 32,
t.s.n., Dec. 6, 1985, Steno, Guiam), to which she affixed
her signature to indorse it (Exhibit N-4, dorsal side). And on the dorsal side of the discount
statement, to which the appellee Pacita Guinsatao
affixed her signa­ture to acknowledge receipt
of the amount of P207,138.82, the amount of
the loan (P225,000), term (three years), manner of payment (semi-annually),
amortization (P35,834.88), interest rate (19% plus 3% bank charge), dates the
amortizations were due, amounts of the interests and principals and balances
were written (Exhibits I, I-1, K-2, I-3). The appellees spouses cannot, therefore, correctly and validly deny
their obligation and liability to the appellant bank just because their
signatures to the promissory note (Exhibit C) had been forged. Without any promissory note duly signed by
them, their obliga­tion to the appellant bank
has been established by their application for
loan, the approval thereof and the receipt
by them of the proceeds of the
loan (Exhibits N-1, pp. 22-23, rec., x x x). Neither can they successfully assail the validity of the real
estate mortgage contract that they have executed in favor of the appellant bank
(Exhibits D, D-1; 2-Bank/Perez; 2-de la Cruz; 2?Framo), absent the
promissory note that they have executed in its favor. For, in said real estate mortgage
contract that they have executed in favor
of the appellant bank, they expressly
admit that the latter has approved in
their favor a loan of P225,000, for
and in consideration of which and as security for the payment of the promissory
note executed in its favor, interest thereon ‘and/or other obligations arising
thereunder or hereunder, the Mortgagor does hereby transfer and convey, by way
of first mortgage, unto the Mortgagee x x x’ the houses and lots covered by TCT
Nos. 145218 and 205830 (Exhibits D, D-1; 2­-Bank/Perez; 2-de la Cruz;
2-Framo). Indeed, it is not only the
payment of the promissory note that is secured by the mortgage but also of the
appellees spouses’ other obligations to the appellant bank. The appellees spouses’ loan in the amount of
P225,000 is among the obligations payment of which is secured by the real
mortgage in question.” (pp. 23-24, Rollo.)

These factual findings of the Court of Appeals, supported by
substantial evidence in the record, are final and conclusive and may not be
reviewed on appeal. (Bustamante vs.
Court of Appeals, 193 SCRA 603.) While a promissory note is evidence of an
indebtedness, it is not the only evidence, for, as in this case, the obliga­tion
of the plaintiffs was proven by a written memoran­dum thereof, admittedly
signed by them.

Furthermore, a Manifestation and Motion was filed by the Bank on
May 9, 1992 stating that on March 23, 1992, the petitioners executed a Deed of
Absolute Sale with Assumption of Mortgage over the property in ques­tion in
favor of their daughter, Nelia Guinsatao Laurel, who thereupon commenced
negotiations to buy her parents’ former property from the bank for P700,000.00,
of which P300,000.00 would be paid immediately and the balance within one (1)
year, with interest. This agreement was
approved on March 28, 1992 by the Board of Directors of the bank which acquired
the property as highest bidder at the extrajudicial foreclosure sale. The petitioners are therefore estopped to
deny the Bank’s title to the property.

WHEREFORE, the petition is DISMISSED for lack of merit,
with costs against the petitioners.

SO ORDERED.

Cruz, (Chairman), Padilla, Bellosillo, and Quiason, JJ., concur.