Title: Ocampo III vs. People, G.R. Nos.

156547-51, February 4, 2008

TOPIC: Elements / Requisites of Civil Obligations - Passive Subject (debtor/obligor)

DOCTRINE: Art. 1953 of the Civil Code provides that “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.” (Art. 1953, New Civil
Code)

FACTS:

The National Aid for Local Government Units (NALGU) in the total amount of
P100,000,000.00 was released by DBM to the Province of Tarlac. Out of this amount,
P56,600,000.00 was loaned by the provincial governor of Tarlac, herein petitioner
Ocampo, to the Lingkod Tarlac Foundation – a private non-stocl corporation where the
petitioner was its first chairperson and the respondent was its executive director – for
the implementation of various livelihood projects.

Petitioner Ocampo neglected to set up safeguards in the proper utilization of the funds
of the Foundation. Consequently, it resulted to the loss of almost P59,000,000.00. The
respondent, as an officer of the Foundation, was charged with malversation of public
funds in connivance with Ocampo.

In its contention, the funds were loaned by the Province of Tarlac to the Foundation;
thus, the ownership for the said funds were vested to the latter which stripped their
public character and transformed to private funds – which are not proper subject for
malversation of public funds.

ISSUE:

Whether the amount loaned out by the Province of Tarlac to LTFI was classified as
public funds.

RULING:

No. The amount loaned out was private in nature. When the LTFI contracted the loan
with the Province of Tarlac, the public fund changed its nature to private character, thus
not a proper subject for malversation of public funds. The relationship between the
Province of Tarlac and the Lingkod Tarlac Foundation, Inc. is that of a creditor and
debtor. Failure to pay the indebtedness would give rise to a collection suit.