G.R. No. 95083 February 9, 1993
SANTOS GUINSATAO and PACITA GUINSATAO, petitioners, vs. THE HON. COURT OF APPEALS, BATAAN DEVELOPMENT BANK, JEREMIAS DELA CRUZ, and ANTONIO PEREZ, respondents.

FACTS

Petitioners Santos and Pacita Guinsatao, with Pacita also acting as attorney-in-fact for Hospicio Framo, applied for a P225,000.00 loan from respondent Bataan Development Bank. The loan was approved, and on March 29, 1982, the petitioners executed a real estate mortgage on a house and lot to secure the obligation. On April 14, 1982, bank chairman Jeremias Dela Cruz informed them of the approval, and a demand draft for P207,138.82 (net after deductions) was issued to Pacita Guinsatao. She endorsed the draft, which Dela Cruz then deposited into his personal account. Pacita acknowledged receipt on the discount statement’s dorsal side, where loan details were written. In 1984, the petitioners demanded the return of their title and cancellation of the mortgage, claiming the loan proceeds were not released. The bank refused, asserting release and receipt, and presented a promissory note. The petitioners alleged the signatures on the promissory note were forged, which an NBI examination later confirmed. The Regional Trial Court ruled in favor of the petitioners, declaring the promissory note and mortgage null and void, ordering cancellation of encumbrances, awarding damages, and making an injunction permanent. The Court of Appeals reversed this decision, dismissing the complaint. The petitioners filed this petition for review.

ISSUE

Whether or not the petitioners received the loan of P225,000.00 and are therefore obligated to pay it, notwithstanding the forgery of their signatures on the promissory note.

RULING

The Supreme Court dismissed the petition, affirming the Court of Appeals. The petitioners’ obligation to pay the loan was established despite the forged promissory note. The Court found that the loan application, its approval, and the petitioners’ receipt of the proceeds (evidenced by Pacita Guinsatao’s endorsement of the bank draft and her acknowledgment on the discount statement) sufficiently proved the existence of the debt. A promissory note is not the sole evidence of indebtedness. Furthermore, the real estate mortgage contract expressly secured the payment of the loan and other obligations. The Court also noted that the petitioners were estopped from denying the bank’s title after they executed a Deed of Absolute Sale with Assumption of Mortgage over the property to their daughter, who subsequently negotiated to repurchase it from the bank. The factual findings of the Court of Appeals, supported by substantial evidence, are final.