CLARA REGALARIO, PETITIONER, VS. NORTHWEST FINANCE CORPORATION AND JOSE QUI, RESPONDENTS.

Regalario versus Northwest Finance Corporation

The Case

This is a petition for review by certiorari brought by Clara Regalario against Northwest Finance Corporation and Jose Qui, asking the Supreme Court to reverse the Court of Appeals. The dispute is over the ownership of a Ford Van. Regalario claims she never truly sold the vehicle to Qui, while Qui claims she did, and Northwest Finance Corporation holds a chattel mortgage over the van that Qui constituted in its favor. The case matters because it gathers in one decision several rules a bar candidate must know: the weight of a duly notarized deed of sale against bare oral testimony, the rule against parole evidence, the deference owed to the factual findings of the Court of Appeals, and the protection the law gives to a mortgagee in good faith who relies on a clean certificate of registration.

Procedural History

Northwest Finance Corporation sued Jose Qui in the Court of First Instance of Manila to recover the van and to have it delivered to the sheriff for foreclosure of the chattel mortgage. Clara Regalario, with leave of court, filed a complaint in intervention, claiming she was the true owner. After trial, the lower court ruled in favor of the corporation against Qui on the loan, but declared Regalario the lawful owner of the van, ordered the corporation to return it, declared the registration in Qui's name null and void, and awarded damages. On Regalario's motion, the judgment was later modified to add that if the truck could no longer be delivered, the corporation would indemnify her for its value. Both respondents appealed. The Court of Appeals modified the judgment: it affirmed the award in favor of the corporation against Qui, but set aside the rest and declared Qui the owner of the van, subject to the corporation's right to foreclose. Regalario then filed this petition for review by certiorari before the Supreme Court.

Facts

Clara Regalario originally owned the Ford Van. She bought it on installment from Manila Trading Supply, Incorporated, in 1958, with Jose Qui acting as guarantor or surety. For a time she exercised dominion over the vehicle, even mortgaging it to different persons.

On August 15, 1960, Regalario executed a public deed of sale conveying the van to Jose Qui. The deed recited that she sold, transferred and conveyed the truck for and in consideration of 10,000 pesos and other valuable considerations, receipt of which was acknowledged from Qui. Regalario later claimed orally that the sale was never consummated because Qui never paid the 10,000 pesos.

Qui then obtained a loan of 15,000 pesos from Northwest Finance Corporation, secured by a chattel mortgage over the van. When the loan matured and Qui failed to pay despite repeated demands, the corporation filed a replevin action. Upon the filing of a bond double the value of the vehicle, the court issued a writ of replevin and the sheriff seized the van. Regalario intervened, claiming ownership and alleging that Qui had registered the vehicle in his name through fraud. During the proceedings she filed two criminal actions for falsification against Qui, both of which were dismissed.

Issues

• Whether or not the Court of Appeals erred in holding Jose Qui, rather than Clara Regalario, the rightful owner of the Ford Van at the time it was mortgaged.
• Whether or not the Court of Appeals properly admitted and considered the testimonies taken during the investigation of the criminal cases before the city fiscals.
• Whether or not Northwest Finance Corporation, as mortgagee, may rely on the clean certificate of registration in Qui's name.

Applicable Provisions

Section 2 of Rule 53 of the Rules of Court, as reproduced in the decision, provides:

Section 2. Hearing and order. The Court of Appeals shall consider the new evidence together with that adduced on the trial below, and may grant or refuse a new trial, or may make such order, with notice to both parties, as to taking further testimony, either orally in court, or by depositions, or render judgment as ought to be rendered, in view of the whole case, upon such terms as it may deem just.

This rule authorized the appellate court to consider the testimonies from the fiscal's investigation together with the trial evidence and to render judgment on the whole record.

Ruling

On the first issue, the Court affirmed the Court of Appeals. The appellate court found that Regalario had executed a public deed of sale in favor of Qui, and that her bare oral claim of nonpayment could not overcome it. The Court held that to overcome a public document solemnly executed before a notary public, the evidence to the contrary must be clear, strong and convincing. It also held that parole evidence will not suffice to negate the clear and positive recitals of a public document not otherwise tainted with fraud or falsification. The Court found ample evidence that there was indeed consideration by way of set-off: Regalario and her common-law husband, Vicente Chua, owed Qui a large sum, and the 10,000 peso price was credited against that indebtedness.

On the second issue, the Court upheld the appellate court's consideration of the testimonies from the fiscal's investigation. While evidence not submitted before the lower court may not ordinarily be considered on appeal, the rule admits of exceptions, as here, where the testimonies were duly transcribed in regular proceedings not impugned by the parties who were themselves the protagonists therein. What matters is the prevention of needless delays and the orderly and expeditious dispatch of judicial business.

On the third issue, the Court held that Northwest Finance Corporation, as a third party in good faith, had every right to rely on the genuineness and regularity of the clean certificate of registration covering the motor vehicle in Qui's name, issued pursuant to Regalario's sale in his favor, and its rights as mortgagee must be upheld.

Doctrine

A duly notarized public deed of sale carries a presumption of regularity and of the truth of its recitals. To overcome a public document solemnly executed before a notary public, the evidence to the contrary must be clear, strong and convincing, and parole evidence will not suffice to negate its clear and positive recitals absent fraud or falsification. The factual findings of the Court of Appeals, when supported by the evidence of record, are binding on the Supreme Court and will not be reviewed save for gross misappreciation of evidence or a total void of evidence. A mortgagee in good faith may rely on the genuineness and regularity of a clean certificate of registration in the mortgagor's name, and its rights as mortgagee will be upheld.

Disposition

The Supreme Court affirmed in all respects the judgment of the Court of Appeals, with costs against petitioner Clara Regalario.

Remember This

The single line worth memorizing is that to overcome a public document solemnly executed before a notary public, the evidence to the contrary must be clear, strong and convincing, and parole evidence will not suffice. Examiners like to use this case on the presumption of regularity of notarized deeds, the conclusiveness of the Court of Appeals' factual findings, and the protection of a mortgagee in good faith who relies on a clean certificate of registration.