NAGUIAT V. CA

412 SCRA 591

Facts:

Queano applied with Naguiat for a loan in the amount of 200,000, which Naguiat granted.

Naguiat endorsed to Queano a check for the amount 95,000. She also issued her own check to the order of Queano.

The proceeds of the said checks were to constitute the loan granted by Naguiat to Queano.

To secure the loan, Queano executed a Deed of Real Estate Mortgage in favor of Naguiat.

The Deed was notarized, and Queano issued to Naguiat a promissory note for the amount of 200,000 with interest 12% per annum.

Queano also issued a check postdated for the amount of 200,000 and payable to the order of Naguiat.

Upon presentment on the maturity date, the check was dishonored for insufficiency of funds. Queano requested the bank to stop payment of her postdated check, but the bank rejected the request pursuant to its policy not to honor such requests if the check is drawn against insufficient funds.

Queano received a letter from Naguiat’s lawyer, demanding settlement of the loan.

Queno told Naguiat that she did not receive the proceeds of the loan, adding that the checks were retained by Ruebenfeldt, who purportedly was Naguiat’s agent.

Naguiat applied for the extrajudicial foreclosure of the mortgage, the Sheriff then scheduled the foreclosure sale.

Issue/s:

1. Does the NOTARIZED mortgage deed enjoys the presumption of truthfulness.

2. Was there an agency relationship between Naguiat and Ruebenfeldt?

Held:

1. The CA is correct in ruling that the presumption of truthfulness of the recitals in the public document was defeated by the clear and convincing evidence in this case that pointed to the absence of consideration.

2. The CA recognized the existence of an “agency by estoppel” citing Art. 1873 of the NCC. Apparently, it is considered as a consequence of the interaction between Naguiat and Reubenfeldt, Queano got the impression that the latter was the agent of the former, but Naguiat did nothing to correct the wrong impression In that situation the rule is clear.

We find no compelling reason to disturb the ruling of the lower courts. That being the case, it follows that the mortgage which is supposed to secure the loan is null and void.