NICANORA G.

BUCTON
VS
RURAL BANK OF EL
SALVADOR INCORPORATED
(G.R. No. 179625, February 24, 2014)
FACTS OF THE CASE
 Concepcion borrowed the title of land owned by Bucton
situated in Cagayan de Oro City, on the pretext that she
was going to show it to an interested buyer which was
granted by the latter.

However, Concepcion obtained a loan in the rural bank

and mortgaged the land to serve as security for the loan,
using the alledged SPA executed by the complainant in
favor of Concepcion.

Concepcion had failed to pay the loan. Thereafter,

Buctons house and lot were foreclosed and sold in an
auction sale in favor of the rural bank.
 Nicanora G. Bucton filed a suit for Annulment of
Mortgage, Foreclosure, and Special Power of
Attorney against Concepcion, Rural Bank of El
Salvador and Cuyong before RTC.

The rural bank contended that it lacks cause of

action as a defense, that the SPA was not forged and
Bucton went to the bank and promised to settle the
loan of Concepcion. It asserted also that it complied
with the requirements of the law in foreclosing the
house and lot.
 The RTC held that the SPA was forged. Hence, the suit
for the annulment of mortgage, foreclosure and the
SPA is granted.

The rural bank elevated the case before the Court of

Appeals, the judgement of trial court were reversed
and ruled in favor of the bank. Hence, this petition.
ISSUE OF THE CASE
Whether or not Concepcion acted as an
agent of Bucton and not in her personal
capacity?
RULING OF THE SUPREME COURT
NO. The Court ruled that the Real Estate
Mortgage was obtained by Concepcion in her
own personal capacity.

As a rule in the case of Philippine Sugar Estates

Development Co. v. Poizat:
In order to bind the principal by a deed
executed by an agent, the deed must upon its face
purport to be made, signed and sealed in the
name of the principal.
In this case, Concepcion failed to indicate in the
mortgage that she was acting for and on behalf
of Bucton which explicitly shows on its face that it
was signed by the former and in her own personal
capacity that is inconsistent with the law on
agency and established jurisprudence.

Furthermore, the rural bank is negligent in

preparing the Real Estate Mortgage as it failed to
indicate that Concepcion was signing it for and
on behalf of Bucton.
Moreover, In the case of DBP v. Guarina, a
rural bank as banking institution must exercise
the highest degree of diligence, as well as to
observe the high standards of integrity and
performance in all its transactions because its
business was imbued with public interest

Thus, the Real Estate Mortgage is void and

unenforceable and Bucton cannot be bound
by the acts of Concepcion.
 THE END
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