GR 183918; (January, 2014) (Digest)
G.R. No. 183918 ; January 15, 2014
FRANCISCO LIM, Petitioner, vs. EQUITABLE PCI BANK, now known as BANCO DE ORO UNIBANK, INC., Respondent.
FACTS
Petitioner Francisco Lim, his brother Franco, and their mother Victoria obtained a ₱30 million loan from respondent Equitable PCI Bank in 1996. To secure the loan, a Real Estate Mortgage was executed over a property co-owned by Francisco and Franco. When the loan was not paid, the bank foreclosed on the property. Subsequently, a Writ of Possession was issued in the bank’s favor.
Francisco Lim then filed a complaint seeking the cancellation of the mortgage and related documents, alleging that his signatures on the Real Estate Mortgage and a Surety Agreement were forged and that he did not authorize Franco to mortgage the property to the bank. The Regional Trial Court (RTC) ruled in favor of Lim, declaring the mortgage and foreclosure sale null and void, finding he had proven by preponderance of evidence that he did not participate in the execution, giving rise to a presumption of forgery.
ISSUE
Whether the Court of Appeals erred in reversing the RTC and dismissing Lim’s complaint, thereby upholding the validity of the Real Estate Mortgage.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals’ decision. The core legal principle applied is that a notarized document carries the presumption of regularity and is a public document that is conclusive as to its due execution. The burden of proof to overturn this presumption lies with the party challenging it, in this case, Francisco Lim.
The Court found that Lim failed to present clear, convincing, and conclusive evidence to overcome this presumption. His mere allegation of forgery, unsupported by competent evidence like a handwriting expert’s testimony or a comparison with his standard signatures, was insufficient. The Court emphasized that the notarized mortgage contract, being a public document, enjoys the prima facie presumption that the notary public performed his duties regularly and that the parties’ signatures are genuine. Lim’s self-serving denial could not prevail over this presumption. Furthermore, the Court noted that Lim had previously authorized Franco to mortgage the same property via an Irrevocable Special Power of Attorney for a prior loan, which was duly registered, indicating a pattern of authorizing his brother to deal with the property. Consequently, the Real Estate Mortgage was declared valid and binding.