View full case

CELESTINA T. NAGUIAT v. CA

FACTS:

The case involves a complaint filed by private respondent Aurora Queaño seeking the cancellation of a real estate mortgage she entered into with petitioner Celestina Naguiat. Queaño applied for a loan with Naguiat, who indorsed a check and issued another check as payment for the loan.

Queaño executed a deed of real estate mortgage and surrendered the owner's duplicates of the titles covering the mortgaged properties to Naguiat. However, the Security Bank check issued by Queaño was dishonored for insufficient funds and Queaño requested the bank to stop payment of the check, which was rejected.

Queaño claimed that she did not receive the loan proceeds and that the checks were retained by an alleged agent of Naguiat. Naguiat applied for the extrajudicial foreclosure of the mortgage, but Queaño filed a case seeking the annulment of the mortgage deed.

The trial court declared the mortgage deed null and void and ordered Naguiat to return the owner's duplicates of the titles to Queaño. Naguiat appealed the decision, but the Court of Appeals affirmed the RTC decision.

Naguiat, in her petition for review, questions the findings of facts made by the Court of Appeals and raises issues regarding the presumption of truth in the mortgage deed and the admissibility of representations made by a third person.

ISSUES:

  1. Whether or not the loan contract between Queaño and Naguiat was perfected.

  2. Whether or not the presumption of truthfulness of the notarized mortgage deed was rebutted.

  3. Whether or not the written representations of Ruebenfeldt are admissible to bind Naguiat.

RULING:

  1. Loan Contract Perfection The loan contract was not perfected because the loan proceeds, represented by the checks issued or endorsed by Naguiat, were neither encashed nor deposited. Under Article 1934 of the Civil Code, a loan contract is a real contract perfected only upon delivery of the object of the contract, i.e., the loan proceeds.

  2. Presumption of Truthfulness The presumption of truthfulness of the notarized mortgage deed was rebutted by clear and convincing evidence indicating there was no consideration for the mortgage, as Queaño did not receive the proceeds of the loan.

  3. Admissibility of Ruebenfeldt's Representations The written representations of Ruebenfeldt are admissible and binding on Naguiat because Ruebenfeldt acted as Naguiat's agent. Ruebenfeldt's authority was recognized by the courts through the doctrine of agency by estoppel.

PRINCIPLES:

  1. Rule on Certiorari under Rule 45 Only questions of law may be raised, and the Supreme Court is not a trier of facts.

  2. Loan Contract A loan contract is a real contract and is perfected only upon the delivery of the object of the contract (Civil Code, Art. 1934).

  3. Notarized Documents The presumption of validity and truthfulness of notarized documents is rebuttable by clear and convincing evidence.

  4. Agency by Estoppel One who clothes another with apparent authority as his agent and holds him out to the public as such cannot deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing in good faith (Civil Code, Art. 1873).

  5. Accessory Contract Principle A mortgage contract, being a mere accessory contract, derives its validity from the principal loan contract, and without a valid principal contract, the mortgage contract cannot stand independently.