G.R. No. 246126 - Ranada vs. Office of the President

Case Summary (G.R. No. 246126)

Applicable Law

The adjudication of the case is primarily governed by the Civil Code, particularly regarding contracts and the principles of mortgage, as well as applicable banking laws.

Loan Agreement and Security Provided

In 1991, Ocampo and Tan secured a loan of P10,000,000.00 (termed as a quedar loan) from the Land Bank, disbursed in stages. The loan was partially backed by warehouse receipts (quedans) for palay, while the remainder was to be supported by an additional form of security due to insufficient collateral. To comply with the bank’s requirements, the petitioners executed a real estate mortgage over two unregistered parcels of land owned by Gloria Ocampo.

Foreclosure Proceedings and Legal Action

Upon Ocampo's failure to service the remaining balance of the loan by the due date, the Land Bank initiated extrajudicial foreclosure proceedings. Notice of this impending auction was duly served to Ocampo, who preemptively filed a complaint in the Regional Trial Court to declare the mortgage null and void and sought damages against the Land Bank and the provincial sheriff.

Allegations of Forgery and Fraud

The petitioners contended that the mortgage agreement was forged, arguing that Ocampo had only signed a blank form with the belief that it pertained to a different loan application, and they further claimed that Tan, who co-signed the mortgage, did not possess ownership rights over the properties. The legal basis claimed for the nullification of the mortgage centered around allegations of forgery and fraud.

Evidence Presented

During the trial, Ocampo maintained that her signature on the mortgage document was executed under the auspices of a blank form. Yet, the Land Bank contested these assertions, reaffirming that the transaction was transparent, and that both Ocampo and Tan willingly signed the mortgage as collateral for the loan. Witness testimony, including that of the bank's account officer, supported the legitimacy of the mortgage.

Ruling of the Regional Trial Court

Initially, the Regional Trial Court ruled in favor of Ocampo and Tan, declaring the mortgage void. This decision highlighted the court's acceptance of the petitioners' claims pertaining to the alleged forgery and absence of proper ownership for Tan.

Court of Appeals' Reversal

Upon appeal, the Court of Appeals reversed the trial court's ruling, affirming the validity of the mortgage and dismissing the complaint. The appellate court elucidated that allegations of forgery were not substantiated by sufficient evidence and that Ocampo had indeed executed the mortgage contract knowingly.

Nuclear Issues for Consideration

Two main issues emerged for resolution: the validity of the real estate mortgage and the extinguishment status of the loan obligation. The Supreme Court's review emphasized the factual nature of the first issue, generally disallowing reexamination of evidence, but acknowledged exceptions where factual findings conflict across lower courts.

Determination of Validity and Consent

The Supreme Court ultimately concluded that the deed of real estate mortgage was valid. It found that despite the petitioners' claims, the execution of the document was done with proper awareness and consent from Ocampo. The court underscored that a notarized document ben