Ocampo v. Land Bank of the Philippines
REITERATIONFacts
The Antecedents: Gloria Ocampo and Teresita Tan obtained a ₱10,000,000.00 loan from Land Bank of the Philippines (Land Bank), secured by grains warehouse receipts (quedans). Quedan and Rural Credit Guarantee Corporation (Quedancor) guaranteed 80% of the loan. To cover the remaining 20% unsecured portion, Ocampo and Tan executed a real estate mortgage over two parcels of unregistered land owned by Ocampo. Procedural History: Land Bank filed a petition for extrajudicial foreclosure of the real estate mortgage due to Ocampo's failure to pay the outstanding balance of the quedan loan. Ocampo and Tan filed a complaint for the nullity of the real estate mortgage and the foreclosure proceedings, alleging forgery and fraud. The Regional Trial Court (RTC) ruled in favor of Ocampo and Tan, declaring the mortgage null and void. The Court of Appeals (CA) reversed the RTC decision, dismissing the complaint. The case was elevated to the Supreme Court. The Petition: Ocampo and Tan filed a Petition for Review on Certiorari, assailing the CA decision and raising issues on the validity of the deed of real estate mortgage and whether the loan obligation was extinguished.
Issue(s)
Whether or not the deed of real estate mortgage was void due to forgery or fraud. Whether or not the loan obligation was already extinguished through a Deed of Absolute Assignment.
Ruling
The Supreme Court denied the petition, affirming the Court of Appeals Decision. The Deed of Real Estate Mortgage was declared valid, and the loan obligation was held not to have been extinguished.
Ratio Decidendi
On the issue of the validity of the deed of real estate mortgage: The Court held that Ocampo's claim of forgery was unsubstantiated. While Ocampo admitted signing a blank form, she also admitted that the signature on the Deed of Real Estate Mortgage was hers. The Court emphasized that a document acknowledged before a notary public enjoys the presumption of regularity and due execution, and to overcome this presumption, clear and convincing evidence is required. Ocampo failed to present such evidence, and her claim of being made to sign a blank form was not sufficiently proven to constitute fraud that would nullify the contract. The Court noted that the alleged fraud must be serious enough to induce an ordinarily prudent person into error, which was not established in this case. Furthermore, the CA correctly pointed out that an action to declare a contract void due to fraud must be instituted within four years from discovery, and Ocampo could not feign ignorance after the mortgage was registered in 1991. On the issue of the extinguishment of the loan obligation: The Court found that Ocampo's claim of full payment through a Deed of Absolute Assignment in favor of Quedancor was invalid as against Land Bank. The Court reiterated that dacion en pago requires the consent of the creditor. In this case, Land Bank, the creditor, was not a party to the Deed of Absolute Assignment executed between Ocampo and Quedancor, who was merely a guarantor for 80% of the loan. Therefore, the assignment could not extinguish the obligation as far as Land Bank was concerned. The Court also highlighted several pieces of evidence indicating the subsisting indebtedness to Land Bank, such as the delivery of property documents to Land Bank, the annotation of the mortgage, and payments made directly to Land Bank. Ocampo's actions of assigning properties to the guarantor without notice to the creditor were deemed insufficient to prove extinguishment of the debt.
Main Doctrine
A Deed of Real Estate Mortgage, even if signed in blank, is considered valid if the mortgagor fails to present clear and convincing evidence of forgery or fraud, and if it is acknowledged before a notary public, it enjoys the presumption of regularity and due execution. Furthermore, a dacion en pago to extinguish a loan obligation requires the consent of the creditor, and an assignment of properties to a guarantor without the creditor's participation does not extinguish the debt as far as the creditor is concerned.