G.R. No. 109803.

April 20, 1998

PHILIPPINE BANK OF COMMUNICATIONS, Petitioner, v. THE COURT OF APPEALS and
OLYMPIA FERNANDEZ-PUEN, Respondents.

Facts:
Olympia Fernandez-Puen is the wife of Chee Puen. She is the president and major stockholder
of the corporation Global, Inc. while her husband is the general manager. They are however,
living separately. The husband proposed to the wife to obtain a loan for the corporation and to
use her paraphernal property as collateral. She agreed believing that the loan would be for 300
thousand and signed a blank mortgage form. However, the actual amount of the loan he
obtained was three million. He misrepresented himself as the president of the corporation to be
able to mortgage the property. After finding out about the loan, the wife filed the case against
her husband to nullify the subject deed of mortgage saying she did not authorize her husband to
mortgage her property to secure the loan. The lower courts ruled in her favour and the mortgage
was nullified.

Issue:
Whether or not the real estate mortgage should be nullified.

Held:
Yes, the real estate mortgage should be nullified. The wife has not consented to collaterize the
three million loan with her paraphernal land. As found by the document examiner, her
signatures in the real estate mortgage document and her Residence Certificate were forged.
The husband also misrepresented himself as the president of the corporation. Also, estoppel
cannot be imputed to the wife as she did not make her husband believe from the very beginning
that she was putting up her paraphernal property to secure the three-million loan for the
corporation. It was the husband who made the misrepresentation thus defrauding the wife. On
the part of the bank, it cannot rely alone on the mortgage application signed in blank by
respondent. As a banking institution, it was grossly negligent when (a) it took no step to verify
whether the respondent was really offering her paraphernal property as collateral; (b) made no
credit check on respondent and Global, Inc.; and (c) conducted no investigation on the
authenticity of the board resolution to effect the real estate mortgage. Laches cannot be also
imputed to the wife. As an equitable defense, laches usually bars only the equitable
enforcement of a right but not the right itself. It is an affirmative defense and the burden of
proving it rests on the defendant. In the case at bar, the wife promptly investigated the
unauthorized loan as soon as she discovered it. And she filed a case to nullify the mortgage as
soon as the investigation on it was completed. Her prompt and decisive actions do not warrant
the assumption that she has abandoned or declined to assert her right to annul the subject real
estate mortgage.