Sps. Celestino & Gliceria Balcon v. Treadsetter Philippines

Summary

Three couples allowed their properties to be mortgaged as collateral for Treadsetter Philippines Inc.'s P30 million loan with Land Bank of the Philippines in exchange for 15% annual risk compensation. When TSPI defaulted and foreclosure proceedings began, the couples sued to annul the mortgage claiming fraud and conspiracy between TSPI and LBP officers. The trial court initially ruled in their favor, finding conspiracy and fraud. However, the Court of Appeals and Supreme Court reversed, holding that the couples voluntarily consented to the mortgage arrangement without being defrauded. The Supreme Court emphasized that fraud must be proven by clear and convincing evidence and that the couples assumed the inherent risk of foreclosure when they voluntarily allowed their properties to secure another party's loan. The mortgage was declared valid and binding, allowing LBP's foreclosure rights to proceed.