G.R. No. 164968 - Ocampo vs. Land Bank of the Philippines

In 1991, Gloria Ocampo and her daughter Teresita Tan obtained a P10,000,000.00 quedan loan from the Land Bank of the Philippines.
The loan was released in two installments:

P3,996,000.00 on January 31, 1991, upon the issuance of promissory notes (PN Nos. 91-038 and 98-039) maturing on July 30, 1991.
P6,000,000.00 on April 5, 1991, upon the issuance of PN Nos. 91-054, 91-055, and 91-056 maturing on October 2, 1991.

The financing was part of the Quedan Financing Program for Grain Stocks involving Quedancor, which guaranteed payment up to 80% of the outstanding loan plus interest at maturity.
Ocampo and Tan presented several grains warehouse receipts (quedans) as collateral; however, this guarantee left a 20% unsecured portion requiring additional security.

To cover the 20% unsecured portion of the loan, the Land Bank requested additional collateral via a letter dated August 15, 1991.
In response, Ocampo and Tan executed a real estate mortgage on two parcels of unregistered land owned by Ocampo, as shown by Tax Declarations Nos. 6958 and 6959 (later replaced by TD No. 317-A).
The mortgage was executed on September 6, 1991 and was duly delivered together with the TDs and the survey plan, then registered with the Register of Deeds of Lingayen, Pangasinan.
Concurrently, Ocampo initiated a land registration case (RTC, Branch 49, Urdaneta, Pangasinan, Land Registration Case No. U-1116) where the Land Bank asked for the mortgage to be taken into account.

After a partial payment (P100,000.00 via debit advices on August 15, 1991) and the maturity of the promissory notes on October 2, 1991, Ocampo failed to pay the remaining balance.
The Land Bank, relying on the unsecured portion, filed for extrajudicial foreclosure of the mortgage on March 27, 2000 under Act No. 3135, as amended.
A Notice of Extrajudicial Sale was issued on April 4, 2000, setting a public auction date for May 30, 2000.
In anticipation of this, Ocampo and Tan filed a Complaint for Declaration of Nullity and Damages (with an Application for a Writ of Preliminary Injunction) against the Land Bank and the Ex Officio Provincial Sheriff of Pangasinan.

Ocampo and Tan claimed that the real estate mortgage was a forgery, asserting that the bank misrepresented the use of the document by failing to inform them it would secure a separate P2,000,000.00 loan, which they neither applied for nor received.
Ocampo testified that she signed a blank form, and portions were later filled, leading to the mortgage being used contrary to her intentions.
Evidence and testimonies (including that of Land Bank’s account officer, Zenaida Dasig) supported that the mortgage was executed to secure the 20% portion of the original quedan loan.
Ocampo’s Deed of Absolute Assignment to Quedancor was presented in support of her claim that she had already settled the loan, though the Land Bank contended that the assignment did not involve the bank as a party.

The RTC (Branch 45, Urdaneta City, Pangasinan) rendered a decision in favor of Ocampo and Tan by declaring the mortgage null and void.
Land Bank moved for reconsideration, which was denied by the RTC.
Subsequently, the Court of Appeals reversed the RTC decision and ordered the dismissal of the complaint, holding that the mortgage was valid and that the loan remained outstanding.
Ocampo and Tan, not filing for reconsideration with the CA, elevated the case to the Supreme Court via a petition for review on certiorari, raising issues on the validity of the mortgage and the extinguishment of the loan.

Whether the deed of real estate mortgage is void due to allegations of forgery.
Whether the “blank form” claim and the overlapping of the typewritten name with the signature constitute evidence of forgery.

Whether, assuming the mortgage is valid, the loan was already extinguished by Ocampo’s alleged full payment.
Whether the execution of the Deed of Absolute Assignment in favor of Quedancor constituted a valid dacion en pago or full settlement of the loan, particularly given that the Land Bank was not a party to that assignment.