In Carolyn Garcia v. Rica Marie Thio, G.R. No. 154878, March 16, 2007, Rica received from Carolyn a crossed check in the amount of $100,000.00 payable to the order of Marilou Santiago. Thereafter, Carolyn received from Rica payments. Again, Rica received a check in the amount of P500,000.00 from Carolyn and payable to the order of Marilou and payments were again made by her representing interests. There was failure to pay the principal amounts hence, a complaint for sum of money with damages was filed. Rica contended that she had no obligation to her as it was Marilou who was indebted as she was merely asked to deliver the checks to Marilou and that the check payments she issued were merely intended to accommodate Marilou. The RTC ruled in favor of Carolyn but the CA reversed on the ground that there was no contract between Rica and Carolyn. On appeal, the SC


Held: There was a contract of loan between Carolyn and Rica.


            A loan is a real contract, not consensual, and as such is perfected only upon the delivery of the object of the contract. This is evident in Art. 1934 of the Civil Code which 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. (Emphasis supplied)


            Upon delivery of the object of the contract of loan (in this case the money received by the debtor when the checks were encashed) the debtor acquired ownership of such money or loan proceeds and is bound to pay the creditor an equal amount. (Naguiat v. CA, G.R. No. 118375, October 3, 2003, 412 SCRA 591).


            It is undisputed that the checks were delivered to Rica. However, these checks were crossed and payable not to the order of Rica but to the order of a certain Marilou Santiago.


            The Court agree with petitioner. Delivery is the act by which the res or substance thereof is placed within the actual or constructive possession or control of another. (Buenaflor v. CA, G.R. No. 142021, November 29, 2000, 346 SCRA 563). Although Rica 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 amounts to Marilou.


            Several factors support this conclusion.


(1)  Carolyn did not know personally Marilou. This was admitted by Rica, hence, it is not possible for Carolyn to grant loans in such big sum of money even without any acknowledgment of debt. It was Rica who had transactions with Marilou.


(2)  It is unbelievable that Rica would put herself in a position where she would be compelled to pay interest out of her own funds for loans she never contracted.


(3)  When Marilou filed a petition for insolvency, it was Rica who was listed as a debtor.


Hence, Rica is the debtor and not Marilou. In People v. Mala, G.R. No.152351, September 18, 2003, 411 SCRA 327 and People v. Dayag, 155 Phil. 421 (1974), it was ruled that:


In the assessment of the testimonies of witnesses, this Court is guided by the rule that for evidence to be believed, it must not only proceed from the mouth of a credible witness, but must be credible in itself such as the common experience of mankind can approve as probable under the circumstances. We have no test of the truth of human testimony except its conformity to our knowledge, observation, and experience. Whatever is repugnant to these belongs to the miraculous, and is outside of juridical cognizance.


No interest if there is no written agreement to pay it; exception.


            Whether the debtor is liable to pay interest since there was no written agreement to pay interest, the SC


Held: No, because no interest shall be due unless it has been expressly stipulated in writing. (Art. 1956, NCC).


            Be that as it may, while there can be no stipulated interest, there can be legal interest pursuant to Article 2209 of the Civil Code. It is well-settled:


            When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. (Eusebio-Calderon v. People, G.R. No. 158495, October 21, 2004, 441 SCRA 137; Eastern Shipping Lines, Inc. v. CA, G.R. No. 97412, July 12, 1994, 234 SCRA 78; Garcia v. Thio, G.R. No. 154878, March 16, 2007).


            Hence, Rica is liable for the payment of legal interest per annum to be computed from the date when she received the demand letter. From the finality of the decision until it is fully paid, the amount due shall earn interest at 12% per annum, the interim period being deemed equivalent to a forbearance of credit. (Cabrera v. People, G.R. 150618, July 24, 2003, 407 SCRA 247).