G.R. No. 208775 - Dabon vs. People

Petitioner Leonardo C. Castillo and respondent Leon C. Castillo, Jr. are siblings; Leon and his wife Teresita Flores-Castillo (the Spouses Castillo) operated JRC Poultry Farms.
Respondent Security Bank Corporation (SBC) granted loans to the Spouses Castillo in 1994 and 1997, secured by real estate mortgages over family properties.

On August 5, 1994, the Spouses Castillo obtained a ₱45,000,000.00 loan from SBC, mortgaging eleven parcels of land—including one titled to Leonardo under TCT No. T-28297.
A second loan of ₱2,500,000.00 was likewise secured by a Pasay City land.
Upon default, SBC foreclosed the securities; at the sale of July 29, 1999, SBC was the winning bidder. The Spouses Castillo redeemed all but the parcels under TCT Nos. 28302 and 28297.

On January 30, 2002, Leonardo filed a complaint to annul the mortgage over TCT No. T-28297, alleging forgery of his signature on a Special Power of Attorney (SPA) dated May 5, 1993, and lack of his consent. He also attacked foreclosure of two other lots and contended SBC’s penalty and interest charges were unconscionable.
The Spouses Castillo maintained the SPA was genuine, that loan proceeds were distributed among family members, and that Leon disbursed personal funds to cover shortfalls before foreclosure.

On October 16, 2006, the RTC of San Pablo City nullified the mortgage insofar as TCT No. T-28297, ordered its return to Leonardo, and awarded ₱500,000.00 moral and ₱20,000.00 exemplary damages.
On November 26, 2010, the Court of Appeals reversed, upheld the validity of the August 5, 1994 mortgage, and denied Leonardo’s appeal. A subsequent motion for reconsideration was denied on March 17, 2011.
Leonardo filed a petition before the Supreme Court for review of the CA’s decision and resolution.

Whether the real estate mortgage over TCT No. T-28297 is valid and binding.
Whether the SPA dated May 5, 1993, was forged and thus deprived Leon of authority to mortgage Leonardo’s property.
Whether SBC’s imposition of penalty and interest on the loans was arbitrary, unconscionable, or contrary to law.