Naguiat vs CA Credit Digest

Naguiat vs CA and Queaño

GR No. 118375, 03 October 2003

412 SCRA 591

FACTS

Queaño applied with Naguiat a loan for P200,000, which the latter granted. Naguiat indorsed to Queaño Associated bank Check No. 090990 for the amount of P95,000 and issued also her own Filmanbank Check to the order of Queaño for the amount of P95,000. The proceeds of these checks were to constitute the loan granted by Naguiat to Queaño. To secure the loan, Queaño executed a Deed of Real Estate Mortgage in favor of Naguiat, and surrendered the owner’s duplicates of titles of the mortgaged properties. The deed was notarized and Queaño issued to Naguiat a promissory note for the amount of P200,000. Queaño also issued a post-dated check amounting to P200,000 payable to the order of Naguait. The check was dishonoured for insufficiency of funds. Demand was sent to Queaño. Shortly, Queaño, and one Ruby Reubenfeldt met with Naguiat. Queaño told Naguiat that she did not receive the loan proceeds, adding that the checks were retained by Reubenfeldt, who purportedly was Naguiat’s agent.

Naguiat applied for extrajudicial foreclosure of the mortgage. RTC declared the Deed as null and void and ordered Naguiat to return to Queaño the owner’s duplicates of titles of the mortgaged lots.

ISSUE

Whether or not the issuance of check resulted in the perfection of the loan contract.

HELD

The Court held in the negative. No evidence was submitted by Naguiat that the checks she issued or endorsed were actually encashed or deposited. The mere issuance of the checks did not result in the perfection of the contract of loan. The Civil Code provides that the delivery of bills of exchange and mercantile documents such as checks shall produce the effect of payment only when they have been cashed. It is only after the checks have been produced the effect of payment that the contract of loan may have been perfected.

Article 1934 of the Civil Code provides: An accepted promise to deliver something by way of commodatum or simple loan is binding upon the parties, but the commodatum or simple loan itsel shall not be perfected until the delivery of the object of the contract. A loan contract is a real contract, not consensual, and as such, is perfected only upon the delivery of the objects of the contract.