Title
Commoner Lending Corp. vs. Balandra
Case
G.R. No. 247646
Decision Date
Mar 29, 2023
A forged GPA allowed a spouse to mortgage property; despite forgery, partial payments ratified the mortgage under Family Code Article 124, making it binding.
nullifies foreclosure
conjugal property
forgery
A

Case Summary (G.R. No. 247646)

Key Dates and Procedural Posture

  • GPA: February 25, 1997.
  • REM and loan disbursement: March 24, 1997 (loan of P300,000).
  • Complaint for Nullity of Documents and Damages filed by respondent: October 24, 1997 (Civil Case No. 23890, RTC Branch 24, Iloilo City).
  • RTC Decision: March 25, 2013 (found forgery; upheld mortgage as to one-half only).
  • CA Decision (appeal): June 21, 2018 (reversed RTC; declared REM and foreclosure null and void in entirety).
  • Supreme Court Decision under review: March 29, 2023.
  • Applicable law referenced throughout decision: 1987 Philippine Constitution; Family Code (notably Article 124 and Article 116); Civil Code provisions cited (Articles 1409 and 1431); Rule 45, Rules of Court.

Factual Allegations and Contentions

  • Respondent’s claims: He alleged Alita forged his signature on the GPA dated February 25, 1997 and that he was physically absent from the country on that date (on board MV ANTJE), hence he never authorized the mortgage; he sought annulment of the GPA and the REM.
  • Petitioner’s claims: The lender maintained it performed credit investigation, required a power of attorney, was shown the GPA and related documents, approved and released the loan on March 24, 1997, and that the mortgage was executed covering the lot and house. Petitioner asserted the spouses defaulted and that respondent had promised partial payment; it contended that respondent ratified the mortgage by partial payments and that the loan benefited the family. Petitioner proceeded to extrajudicial foreclosure and acquired the mortgaged properties.

Trial Court (RTC) Findings and Ruling

  • The RTC found the respondent’s signature on the GPA to be a forgery and characterized the GPA as absolutely simulated (invoking Article 1409 of the Civil Code).
  • The RTC ruled that partial payments by respondent did not constitute ratification, viewing those payments as attempts to avoid execution rather than genuine ratification.
  • Despite finding forgery, the RTC concluded the mortgaged property was conjugal and sustained the REM only insofar as it affected one-half (1/2) of the property (the portion validly mortgaged by the wife), ordering reimbursement and costs accordingly.
  • Motions for reconsideration by both parties were denied by the RTC (Order dated July 19, 2013), the RTC holding that respondent failed to rebut the presumption of conjugal ownership and that petitioner failed to prove that the loan redounded to the benefit of the family.

Court of Appeals (CA) Ruling

  • The CA reversed the RTC, declaring the REM of March 24, 1997 null and void for lack of respondent’s consent and likewise nullified the foreclosure and certificate of sale. It ordered cancellation of the new TCT issued to petitioner and reinstatement of TCT No. T-126054 in the spouses’ names, and ordered return of possession to the spouses.
  • The CA affirmed the RTC’s findings of forgery and that the loan did not redound to the benefit of the family.
  • Relying on Article 124 of the Family Code, the CA held that the REM was void in its entirety and characterized the transaction as legally inexistent and absolutely wanting in civil effects, concluding the REM could not be cured or ratified even though respondent made partial payments.

Issues Presented to the Supreme Court

The petitioner assigned errors raising principally:

  1. Whether the CA erred in ruling the GPA was forged (factual challenge).
  2. Whether the respondent’s subsequent partial payment ratified the mortgage.
  3. Whether the REM redounded to the benefit of the family.

Scope of Supreme Court Review and Factual Findings on Forgery

  • The Supreme Court observed that the question of forgery and related signature comparisons were essentially factual and had been resolved both by the RTC and affirmed by the CA. Under Rule 45 only questions of law are reviewable; the Court will not re-evaluate factual findings absent recognized exceptions (none applicable here).
  • The Court nonetheless summarized the factual bases supporting the lower courts’ forgery findings: two handwriting experts (one for each party) both concluded the questioned signature differed from respondent’s standards; visual assessment by the Court showed glaring dissimilarities; and documentary evidence showed respondent’s physical impossibility to have executed the GPA on the date alleged because he was abroad and on board MV ANTJE. These factual findings were treated as binding.

Legal Framework Governing Encumbrance of Conjugal Property (Article 124 and Precedents)

  • The Court applied the Family Code as the governing law because the REM was executed after the Family Code’s effectivity. It reiterated the rule from Alexander v. Spouses Escalona: the legal effect of an alienation or encumbrance of conjugal property depends on whether it occurred before or after the Family Code’s effectivity—transactions without spousal consent executed after the Family Code’s effectivity are void under Article 124.
  • Article 124 was quoted and analyzed: a disposition or encumbrance without the written consent of the other spouse is void, but such transactions are construed as a continuing offer by the consenting spouse and the third person and may be perfected as a binding contract upon acceptance by the other spouse or authorization by the court before the offer is withdrawn.
  • The Court emphasized the distinction between void dispositions under Article 124 (susceptible to perfection by acceptance) and absolutely simulated instruments under Article 1409 of the Civil Code (legally inexistent and incapable of ratification).

Analysis and Ruling on Acceptance/Ratification by Partial Payments

  • The Supreme Court held that while the REM was executed without respondent’s written consent (rendering it void under Article 124), the void transaction constituted a continuing offer that the non-consenting spouse could accept. The respondent’s conduct—undertaking to pay the loan and making partial
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