FACTS:

The case involves a dispute between Felina Giron-Roque (Felina), Philippine National Bank (PNB), and Dr. Gloria M. Apostol (Gloria) and her husband Dr. Edward Apostol (Spouses Apostol). Felina obtained a credit line from PNB in 1995 and availed of a loan from the credit line in 1997. While Felina was in the United States, Gloria purportedly filed an application for a second loan on Felina's behalf. Felina later discovered that Gloria withdrew a check for the second loan without her authorization. PNB demanded payment for both loans, but instead of paying, Felina requested an investigation of the second loan. Felina later tendered a cashier's check as payment for the first loan, but PNB refused it. PNB then proceeded with the extrajudicial foreclosure of Felina's property. Felina filed a complaint to annul the foreclosure sale and sought damages. The RTC ruled in Felina's favor, declaring the foreclosure null and void. The CA affirmed the decision but modified it by ordering Spouses Apostol to pay PNB the amount of the second loan. PNB appealed to the Supreme Court, but the petition was denied. The Court ordered Felina to settle the remaining balance of the first loan and affirmed the annulment of the foreclosure sale without prejudice to PNB's remedies if Felina fails to settle the loan.

ISSUES:

1. Whether or not the Court of Appeals correctly affirmed the nullification of the extrajudicial foreclosure proceedings covering Felina's real property subject of the real estate mortgage.

RULING:

1. The Court of Appeals correctly affirmed the nullification of the extrajudicial foreclosure proceedings. The courts a quo unanimously found that Felina did not avail of the second loan, as her signature in the subject check was forged, Gloria was not duly authorized to obtain the second loan, and PNB was remiss in its diligence as a banking institution. Therefore, the second loan is null and void, significantly reducing Felina's outstanding balance to PNB. The annulment of the extrajudicial proceedings is upheld, and Felina is given a reasonable opportunity to fully settle her remaining obligation to PNB. The annulment is without prejudice to PNB's availment of proper remedies if the loan obligation remains unsettled after the given period.