 Case: Naguiat v.

CA, 3 October 2003

 CELESTINA T. NAGUIAT, petitioner,vs.COURT OF APPEALS and AURORA
QUEAÑO, respondents.
 Topic: Simple Loan/Mutuum : Perfected until Delivery of the object of the
contract

Doctrines:
 Supreme Court is not a trier of facts
 Conclusiveness of the findings of facts of the lower courts unless exceptions are present
 Agency by estoppel : One who clothes another with apparent authority as his agent, and holds
him out to the public as such, cannot be permitted to deny the authority of such person to act as
his agent, to the prejudice of innocent third parties dealing with such person in good faith, and
in the honest belief that he is what he appears to be.
 Presumption of truthfulness engendered by notarized documents: A  rebuttable presumption,
yielding as it does to clear and convincing evidence to the contrary
 A loan contract is a real contract, not consensual, and, as such, is perfected only upon the
delivery of the object of the contract.

Facts:

On 11 August 1980, Respondent QUEAÑO loaned an amount of Php 200k from Petitioner NAGUIAT, at
an interest of 12% per annum, payable by 11 September 1980. Thereafter, petitioner issued two checks
to the respondent at 95K each representing the agreed loan amount. To secure the loan, a deed of Real
Estate Mortgage dated 11 August 1980 was executed by the respondent in favor of the petitioner
involving the surrender of the  owner’s duplicates of the titles. To secure the promised
payment/settlement, respondent issued a check postdated on 11 September 1980 amounting to Php
200k. On maturity date , the check was presented to the bank but it returned due to insufficient funds
(DAIF). Respondent QUEAÑO eventually received a demand letter from the petitioner requiring
settlement of the loan. Shortly thereafter, Queaño and one Ruby Ruebenfeldt (Ruebenfeldt) met with
Naguiat where respondent informed not having received the loan proceeds from the agent
Ruebenfeldt.

An action for extrajudicial foreclosure of the mortgage was then commenced by Naguiat, and
foreclosure sale was scheduled on 14 August 1981. 3 days prior to that, respondent  filed the case
before the Pasay City RTC,8 seeking the annulment of the mortgage deed, hence, auction sale was
stopped.

RTC declared the Deed of Real Estate Mortgage (REM) null and void, and ordering Naguiat to return to
Queaño the owner’s duplicates of her titles to the mortgaged lots. This was affirmed by the CA in toto
upon appeal. Hence, this present petition.

Main Issues and Ruling:

1. Whether or not the contract of simple loan or mutuum was perfected.

No. The contract of loan was not perfected. Art. 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 itself 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
object of the contract.

In this case, the objects of the contract are the loan proceeds which Queaño would enjoy only upon the
encashment of the checks signed or indorsed by Naguiat. If indeed the checks were encashed or
deposited, Naguiat would have certainly presented the corresponding documentary evidence, such as
the returned checks and the pertinent bank records. Since Naguiat presented no such proof, it follows
that the checks were not encashed or credited to Queaño’s account.1

2. Whether or not the of the Deed of REM is null and void.

Yes. SC finds no compelling reason to disturb the finding of the courts a quo that the lender did not
remit and the borrower did not receive the proceeds of the loan. That being the case, it follows that the
mortgage which is supposed to secure the loan is null and void. The consideration of the mortgage
contract is the same as that of the principal contract from which it receives life, and without which it
cannot exist as an independent contract. A mortgage contract being a mere accessory contract, its
validity would depend on the validity of the loan secured by it.