GARCIA v.

THIO 518 SCRA 433

1315-1319 – Stages and Essential Requisites of Contracts

SYNOPSIS: This involves a loan between Garcia and Thio. The latter obtained two loans from Garcia but were not paid. It was shown
that the two checks evidencing the amounts were named payable to order to a certain
Marilou Santiago. Thio argued that the contract of loan was not between her and Garcia but between Santiago. The court ruled in this
case however that there was a perfected real loan of contract between Garcia and Thio because the crosschecking was made in
favor of Thio who planned to re-lend the amount to Marilou Santiago thus there was a delivery to a constructive possession of
Thio thus a perfected loan was present.

FACTS: Sometime in February 1995, Rica Marie S. Thio received form Carolyn M. Garcia a cross-check in the amount of
US$100,000 payable to order of a certain Marilou Santiago. Thereafter, Garcia received from Thio every month certain amounts.
There was another cross-check on P500K.

According to Garcia, Thio failed to pay the principal amounts of the loan which is US$100,000 and the P500,000 when they became
due. Thus, on February 1996, Garcia filed a complaint for the sum of money.

Garcia alleged that on February 24, 1995, Thio borrowed from her the amount of US$100,000 with 3%int per month, which loan would
mature on October 1995 covered by first check.

And on June 29, 1995, Thio borrowed from her the amount of US$100,000 with 4%int per month, which loan would mature on October
1995 covered by second check.

For both loans, no PN was executed since petitioner and respondent were close friends at the time. Thio paid the stipulated interest
but failed to pay the principal. Thio denied that she contracted the two loans with Garcia and countered that it was Marilou Santiago
to whom Garcia lent the money. She claimed that she was merely asked by Garcia to give crossed checks to Santiago.

RTC ruled in favor of Garcia but CA reversed stating that there was no
contract of loan between the parties.

ISSUE: WON there was a real contract of loan.

RULING: YES.

Loan is a Real Contract

A loan is a form of a real contract, not consensual, and as such is perfected only upon the delivery of the object of the contract. Upon
delivery of the object of the contract of loan (which is 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. However, these checks were crossed and payable

Thus, the main question left to be resolved is that: who borrowed money from
Garcia, is it Thio or Santiago?

Garcia argues that it was upon Thio’s instruction that both checks were made payable to Santiago. Garcia maintains that it was also upon
Thio’s instruction that both checks were delivered to her, so she could in turn deliver the same to Santiago. The court agrees with
Garcia.

Delivery is the act by which the substance thereof is placed within the actual or constructive possession or control of another. Although
Thio did not physically receive the proceeds of the checks, the instruments were placed in her control under an arrangement
whereby she actually re-lent the amount to Santiago.