Case Summary (G.R. No. 153563)
Petitioners
Conchita Gloria and Maria Lourdes Gloria-Payduan seek annulment of the real estate mortgage and promissory note, cancellation of annotations on TCT No. 35814, return of the title, and damages for fraud, forgery, and negligence.
Respondent
Builders Savings and Loan Association, Inc. contends that Conchita voluntarily executed the mortgage, that Maria Lourdes lacks capacity and interest to sue, and that procedural defects (defective verification and absent certification against forum shopping) fatally undermine the action.
Key Dates
• August 14, 1987 – Death of Juan Gloria
• June 26–28, 1991 – Date appearing on forged mortgage and promissory note
• December 7, 1993 – Filing of Second Amended Complaint in RTC Civil Case No. Q-93-16621
• September 26, 2003 – RTC Decision dismissing complaint
• March 12, 2004 – RTC Order granting reconsideration and annulling mortgage and note
• March 13, 2012 – CA Decision reversing RTC Order and dismissing complaint
• June 18, 2012 – CA Resolution denying reconsideration
• June 4, 2018 – Supreme Court Decision
Applicable Law
• 1987 Philippine Constitution
• Civil Code provisions on simulation (Arts. 1346, 1409), contract voidability (Art. 1330), mortgagor’s free disposal (Art. 2085)
• Rules of Court on real party in interest (Rule 3, Sec. 2), verification and certification against forum shopping (Rule 7)
• Jurisprudence requiring banks’ extra diligence in land mortgages (Gatioan v. Gaffud; Rural Bank of Caloocan City v. CA)
Factual Antecedents
Conchita entrusted TCT 35814 to Biag in 1988 for reconstitution after a registry fire. Biag instead mortgaged the property in 1991 with Builders Savings by forging Conchita’s and the already-deceased Juan’s signatures. Unaware, Conchita and Lourdes later discovered the foreclosure sale and initiated suit to annul the transaction, alleging fraud, forgery, and negligence.
Regional Trial Court Ruling
The RTC initially dismissed the complaint but, on reconsideration, found Biag’s fraud voided consent. It held Builders Savings negligent for failing to verify Conchita’s capacity, Juan’s death, and title authenticity. Pursuant to Civil Code and banking diligence precedents, the RTC declared the mortgage and promissory note null and void, ordered cancellation of annotations, return of the title, and awarded moral damages of ₱200,000 and attorney’s fees of ₱20,000.
Court of Appeals Ruling
The CA reversed, holding Maria Lourdes was not a real party in interest absent prior adjudication of heirship. It dropped Conchita for failing to sign the verification and certification against forum shopping. It deemed Lourdes’s testimony hearsay and found no procedural or substantive basis to annul the mortgage.
Issues
- Whether Maria Lourdes, as an heir-co-owner, is a real party in interest without prior heirship declaration.
- Whether failure of Conchita to sign verification and certification fatally affects the complaint and if the CA exceeded issues raised on appeal.
Supreme Court Analysis
- Succession vests immediately at death (Arts. 494, 777); no judicial declaration of heirship is prerequisite to assert rights of the decedent. Uncontested birth certificate and testimony establish Lourdes’s status and interest.
- In co-ownership suits, substantial compliance with verification and certification suffices when parties share a common interest in the
Case Syllabus (G.R. No. 153563)
Facts of the Case
- Spouses Juan and Conchita Gloria held title to a parcel of land in Kamuning, Quezon City (TCT No. 35814); their daughter is Maria Lourdes Gloria-Payduan.
- Juan Gloria died on August 14, 1987.
- In December 1993, Conchita and Lourdes filed suit for declaration of nullity of a real estate mortgage and promissory note, cancellation of annotations on TCT 35814, return of title, and various damages and fees.
- Plaintiffs alleged that Benildo Biag induced them to surrender the original title under pretense of reconstitution after a registry fire, then mortgaged the property to Builders Savings and Loan Association, Inc. (“Builders Savings”) without their informed consent.
- They claimed Conchita’s signature was procured by fraud, that Juan’s signature was forged posthumously, and that no notarial formalities were observed.
- As a result of the collusion between Biag and Builders Savings, the property was foreclosed and sold to the latter.
Complaint and Prayer for Relief
- Plaintiffs sought:
• Declaration that the June 26, 2001 mortgage and related June 28, 2001 promissory note are null and void.
• Cancellation of encumbrances on TCT 35814 and return of free-and-clear title.
• Award of moral damages (₱500,000.00), exemplary damages (₱50,000.00), actual damages (₱20,000.00), attorney’s fees (₱20,000.00), and costs of suit.
Respondent’s Defense
- Builders Savings and Biag contended that Lourdes lacked capacity, interest, and authority to sue, as she was neither adopted nor empowered by special power of attorney.
- Conchita allegedly did not verify the complaint or appear at trial.
- A credit investigator testified that both spouses and Lourdes voluntarily applied for the loan and produced identifying documents; the submission of house plans and tax declarations evidenced voluntary mortgage.
RTC Proceedings and September 26, 2003 Decision
- The Quezon City RTC, Branch 224, dismissed the complaint and all counterclaims for lack of merit.
- Plaintiffs moved for reconsideration.
RTC Reconsideration and March 12, 2004 Order
- The court found that:
• Biag falsely represente