Carolyn M.

Garcia
-vs-
Rica Marie S. Thio
GR No. 154878, 16 March 2007

FACTS
            Respondent Thio received from petitioner Garcia two crossed checks which
amount to US$100,000 and US$500,000, respectively, payable to the order of
Marilou Santiago. According to petitioner, respondent failed to pay the principal
amounts of the loans when they fell due and so she filed a complaint for sum of
money and damages with the RTC. Respondent denied that she contracted the two
loans and countered that it was Marilou Satiago to whom petitioner lent the money.
She claimed she was merely asked y petitioner to give the checks to Santiago. She
issued the checks for P76,000 and P20,000 not as payment of interest but to
accommodate petitioner’s request that respondent use her own checks instead of
Santiago’s.

            RTC ruled in favor of petitioner. CA reversed RTC and ruled that there was
no contract of loan between the parties.

ISSUE
(1)   Whether or not there was a contract of loan between petitioner and respondent.
(2)   Who borrowed money from petitioner, the respondent or Marilou Santiago?

HELD
(1)           The Court held in the affirmative. A loan is a real contract, not
consensual, and as such I perfected only upon the delivery of the object of the
contract. Upon delivery of the contract of loan (in this case the money received by
the debtor when the checks were encashed) the debtor acquires ownership of such
money or loan proceeds and is bound to pay the creditor an equal amount. It is
undisputed that the checks were delivered to respondent.

(2)           However, the checks were crossed and payable not to the order of
the respondent but to the order of a certain Marilou Santiago. Delivery is the act by
which the res or substance is thereof placed within the actual or constructive
possession or control of another. Although respondent did not physically receive
the proceeds of the checks, these instruments were placed in her control and
possession under an arrangement whereby she actually re-lent the amount to
Santiago.

Petition granted; judgment and resolution reversed and set aside.

Tan vs. Villapaz, 476 SCRA 229
Facts:

 On February 6, 1992, respondent issued a Philippine Bank of Communications

(PBCom) crossed check in the amount of P250,000.00, payable to the order of
petitioner Tony Tan. On even date, the check was deposited at the drawee bank,
PBCom Davao City branch at Monteverde Avenue, to the account of petitioner
Antonio Tan also at said bank.

The Davao del Sur Police issued an invitation-request to petitioner Antonio Tan
inviting him to appear before the Deputy Chief of Police Office on June 27, 1994
at 9:00 o’clock in the morning “in connection with the request of respondent
Carmelito Villapaz, for conference of vital importance.” On the advice of his
lawyer, he did not show up at the Davao del Sur Police Office.

Respondent filed a Complaint for sum of money against petitioners-spouses,

alleging that, inter alia, on February 6, 1992, petitioners-spouses repaired to his
place of business at Malita, Davao and obtained a loan of P250,000.00, hence, his
issuance of the February 6, 1992 PBCom crossed check which loan was to be
settled interest-free in six (6) months; on the maturity date of the loan or on August
6, 1992, petitioner Antonio Tan failed to settle the same, and despite repeated
demands, petitioners never did, drawing him to file the complaint.

Petitioners alleged that the check was issued by respondent in Davao City “in
exchange for equivalent cash”; they never received from respondent any demand
for payment, be it verbal or written, respecting the alleged loan; since the alleged
loan was one with a period — payable in six months, it should have been expressly
stipulated upon in writing by the parties but it was not, hence, the essential
requisite for the validity and enforceability of a loan is wanting; and the check is
inadmissible to prove the existence of a loan for P250,000.00. The RTC dismissed
the complaint. The CA reversed the trial court’s decision. Hence, the present
appeal by petitioners.

Issue: 

Whether or not the CA erred in concluding that the transaction in dispute was a
contract of loan and not a mere matter of check encashment as found by the trial
court.

Held:

 No. Petitioners’ version was correctly denied credit by the appellate court. That
apart from the check no written proof of the grant of the loan was executed was
credibly explained by respondent when he declared that petitioners’ son being his
godson, he, out of trust and respect, believed that the crossed check sufficed to
prove their transaction. As for petitioners’ reliance on Art.1358 of the Civil Code,
the same is misplaced for the requirement that contracts where the amount
involved exceeds P500.00 must appear in writing is only for convenience. At all
events, a check, the entries of which are no doubt in writing, could prove a loan
transaction.

That petitioner Antonio Tan had, on February 6, 1992, an outstanding balance of

more than P950,000.00 in his account at PBCom Monteverde branch where he was
later to deposit respondent’s check did not rule out petitioners’ securing a loan. It is
pure naivete to believe that if a businessman has such an outstanding balance in his
bank account, he would have no need to borrow a lesser amount. In fine, as
petitioners’ side of the case is incredible as it is inconsistent with the principles by
which men similarly situated are governed, whereas respondent’s claim that the
proceeds of the check, which were admittedly received by petitioners, represented
a loan extended to petitioner Antonio Tan is credible, the preponderance of
evidence inclines on respondent.
YONG CHAN KIM, petitioner
vs.
PEOPLE OF THE PHILIPPINES
G.R. No. 84719January 25, 1991

Doctrine: In commodatum, the bailor retains the ownership of the thing loaned,
while in simple loan, ownership passes to the borrower

Facts:
Petitioner Yong Chan Kim was employed as a Researcher at the Aquaculture
Department of the Southeast Asian Fisheries Development Center (SEAFDEC)
with head station at Tigbauan, Province of Iloilo. As Head of the Economics Unit
of the Research Division, he conducted prawn surveys which required him to travel
to various selected provinces in the country where there are potentials for prawn
culture.
On 15 June 1982, petitioner was issued Travel Order No. 2222 which covered his
travels to different places in Luzon from 16 June to 21 July 1982, a period of thirty
five (35) days, where he received P6,438.00 as cash advance to defray his travel
expenses.
Within the same period, petitioner was issued another travel order, T.O. 2268,
requiring him to travel from the Head Station at Tigbauan, Iloilo to Roxas City
from 30 June to 4 July 1982, a period of five (5) days, where petitioner received a
cash advance of P495.00.
On 14 January 1983, petitioner presented both travel orders for liquidation,
submitting Travel Expense Reports to the Accounting Section. When the Travel
Expense Reports were audited, it was discovered that there was an overlap of four
(4) days (30 June to 3 July 1982) in the two (2) travel orders for which petitioner
collected per diems twice.
Petitioner was required to comment on the internal auditor's report regarding the
alleged anomalous claim for per diems. In his reply, petitioner denied the alleged
anomaly, claiming that he made make-up trips to compensate for the trips he failed
to undertake under T.O. 2222 because he was recalled to the head office and given
another assignment.

Issue:
Was petitioner under obligation to return the same money (cash advance), which
he had received?

Held:
No. Excutive Order No. 10, dated 12 February 1980 provides as follows:
"B. Cash Advance for Travel
"4. All cash advances must be liquidated within 30 days after date of projected
return of the person. Otherwise, corresponding salary deduction shall be made
immediately following the expiration day."
Liquidation simply means the settling of indebtedness. An employee, such as
herein petitioner, who liquidates a cash advance is in fact paying back his debt in
the form of a loan of money advanced to him by his employer, as per diems and
allowances.
Similarly, as stated in the assailed, decision of the lower court, "if the amount of
the cash advance he received is less than the amount he spent for actual travel x x
x he has the right to demand reimbursement from his employer the amount he
spent coming from his personal funds."
In other words, the money advanced by either party is actually a loan to the other.
Hence, petitioner was under no legal obligation to return the same cash or money,
i.e., the bills or coins, which he received from the private respondent.
Article 1933 and Article 1953 of the Civil Code define the nature of a simple loan.
"Art. 1933. By the contract of loan, one of the parties delivers to another, either
something not consumable so that the latter may use the same for a certain time
and return it, in which case the contract is called a commodatum; or money or
other consumable thing, upon the condition that the same amount of the same kind
and quality shall be paid, in which case the contract is simply called a loan or
mutuum.
Commodatum is essentially gratuitous. Simple loan may be gratuitous or with a
stipulation to pay interest. In commodatum, the bailor retains the ownership of the
thing loaned, while in simple loan, ownership passes to the borrower."
"Art. 1953. - A person who receives a loan of money or any other fungible thing
acquires the ownership thereof, and is bound to pay to the creditor an equal amount
of the same kind and quality."
In this case, there is transfer of ownership of money to the petitioner subject to a
suspensive condition that he liquidates the amount of cash advance upon return to
station and completion of the travel.