Ocampo v. First Metro Leasing & Finance Corp.
REITERATIONFacts
1. The Antecedents: Spouses Rosauro and Fe Ocampo (petitioners) filed an action for annulment of a real estate mortgage against First Metro Leasing and Finance Corporation (respondent). They alleged that they were made to execute a document that turned out to be a real estate mortgage without their full knowledge, that the deed was invalid due to lack of property identification, and that their consent was vitiated by mistake and undue influence. They sought to annul the mortgage and prevent foreclosure proceedings, claiming damages. The respondent countered that the mortgage was validly executed as security for postdated checks, that the petitioners, being experienced businessmen, could not have been misled, and that they were estopped from questioning the mortgage due to their subsequent settlement proposals. 2. Procedural History: The Regional Trial Court (RTC) dismissed the petitioners' complaint, finding the real estate mortgage valid. The RTC determined that the petitioners understood and voluntarily executed the mortgage, surrendered their title for annotation, and that their claim of mistake or undue influence was unfounded given their business experience. The RTC also noted that the signature of Fe Ocampo was authentic and that the petitioners were estopped from questioning the mortgage. The petitioners appealed to the Court of Appeals (CA), which affirmed the RTC's decision in its entirety, finding the petitioners' claims of vitiated consent to be incredible and emphasizing the voluntary execution of the mortgage and surrender of the title. 3. The Petition: The petitioners filed a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure, seeking to set aside the CA's decision. They argued that the CA committed serious errors of fact and law by affirming the RTC's decision, asserting that only Rosauro Ocampo, Jr. signed the mortgage document while it was blank, and that the mortgage was constituted before the underlying transaction for the postdated checks existed. The Supreme Court, while generally not re-examining factual findings in a Rule 45 petition, agreed to review the petitioners' claim regarding the timing of the mortgage and the underlying transaction to settle the controversy. controversy. The Court found this claim to be without merit, noting that the petitioners themselves admitted the simultaneous execution of the transactions in their complaint and that documentary evidence, specifically a Deed of Assignment dated December 1, 1981, alongside the Deed of Real Estate Mortgage notarized on the same date, proved that the mortgage was indeed executed simultaneously as security for the sale of postdated checks.
Issue(s)
Whether the Court of Appeals committed serious errors of fact and law in affirming the lower court's decision that the subject deed of real estate mortgage is valid. Whether the real estate mortgage is valid despite the petitioners' claim that the principal transaction for the purchase of postdated checks was non-existent at the time of its execution.
Ruling
The petition is denied, and the Decision of the Court of Appeals dated October 17, 2000, is affirmed.
Ratio Decidendi
On the validity of the real estate mortgage: The Supreme Court found no serious errors of fact or law in the Court of Appeals' decision affirming the lower court's validation of the real estate mortgage. The Court reiterated that it is not its function to re-examine evidence in a petition for review on certiorari unless the CA's findings are unsupported by evidence or based on a misapprehension of facts, which was not the case here. The CA's factual findings that the petitioners freely, voluntarily, willingly, and consciously executed the deed of mortgage and surrendered their owner's duplicate copy of the title were deemed conclusive. The Court also upheld the CA's conclusion that the signature of Fe Ocampo was authentic, as determined by the RTC through comparison with her signature on an authorized signature card. On the existence of the principal contract and validity of the mortgage: The Supreme Court found the petitioners' claim that the principal transaction was non-existent at the time of the mortgage's constitution to be without merit. The petitioners themselves admitted in their complaint that the transaction for the purchase of postdated checks and the execution of the deed of mortgage occurred simultaneously on November 26, 1981. Furthermore, testimonial and documentary evidence, specifically the Deed of Assignment dated December 1, 1981, and the Deed of Real Estate Mortgage dated December 1, 1981, both notarized on the same day, proved that the mortgage was executed simultaneously as security for the sale of the postdated checks. The Deed of Assignment involved postdated checks with a loan value of ₱650,000.00, which precisely matched the principal amount stated in the Deed of Real Estate Mortgage. This belied the petitioners' claim that there was no principal contract to support the mortgage. The Court emphasized that experienced businessmen, like the petitioners who were engaged in the financing business, could not have been misled by mistake or undue influence into signing documents without reading them, and their prior settlement proposals estopped them from questioning the mortgage's existence.
Main Doctrine
A real estate mortgage executed as security for a loan or other credit accommodation is valid even if the principal contract is one for the purchase of postdated checks, provided that both transactions are contemporaneous and the mortgage sufficiently describes the secured obligation.