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LEONARDO C. CASTILLO v. SECURITY BANK CORPORATION

FACTS:

The case involves the validity of a real estate mortgage entered into by the respondents, spouses Leon C. Castillo, Jr. and Teresita Flores-Castillo, with Security Bank Corporation (SBC). The respondents obtained a loan from SBC and executed a real estate mortgage over various properties to secure the loan. The petitioner, Leonardo C. Castillo, who is the sibling of Leon, filed a complaint seeking the partial annulment of the real estate mortgage. Leonardo argued that the property covered by Transfer Certificate of Title (TCT) No. 28297, which he owns, was included in the mortgage without his consent and that his signature on the Special Power of Attorney (SPA) authorizing the mortgage was falsified.

Leonardo also challenged the foreclosure of other properties that were still registered under their deceased father, as well as the penalties and interest imposed by SBC. The Regional Trial Court (RTC) ruled in Leonardo's favor, declaring the real estate mortgage null and void and ordering SBC to return the ownership of TCT No. 28297 to Leonardo. However, the Court of Appeals (CA) reversed the RTC's decision and upheld the validity of the real estate mortgage.

Leonardo appealed to the Supreme Court, contending that the real estate mortgage is not valid.

ISSUES:

  1. Whether or not the real estate mortgage constituted over the property under TCT No. T-28297 is valid and binding.

RULING:

  1. The Court finds the petition to be without merit. The Court ruled that the real estate mortgage constituted over the property under TCT No. T-28297 is valid and binding.

PRINCIPLES:

  • The jurisdiction of the Court over appealed cases from the CA is limited to the review and revision of errors of law it allegedly committed, as its findings of fact are deemed conclusive.

  • Legal requisites for a mortgage to be valid are: (1) It must be constituted to secure the fulfillment of a principal obligation; (2) The mortgagor must be the absolute owner of the thing mortgaged; (3) The persons constituting the mortgage must have the free disposal of their property, and in the absence thereof, they should be legally authorized for the purpose.

  • Allegations of forgery must be proved by clear, positive, and convincing evidence.

  • In determining forgery, the alleged forged signature must be compared with genuine signatures for verification.