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PAJUYO V. CA
GR No. 146364 June 3, 2004
Facts: Pajuyo entrusted a house to Guevara for the latter's use provided he should return the same upon
demand and with the condition that Guevara should be responsible of the maintenance of the property.
Upon demand Guevara refused to return the property to Pajuyo. The petitioner then filed an ejectment case
against Guevara with the MTC who ruled in favor of the petitioner. On appeal with the CA, the appellate
court reversed the judgment of the lower court on the ground that both parties are illegal settlers on the
property thus have no legal right so that the Court should leave the present situation with respect to
possession of the property as it is, and ruling further that the contractual relationship of Pajuyo and
Guevara was that of a commodatum.
Issue: Is the contractual relationship of Pajuyo and Guevara that of a commodatum?
Held: No. The Court of Appeals theory that the Kasunduan is one of commodatum is devoid of merit. In a
contract of commodatum, one of the parties delivers to another something not consumable so that the latter
may use the same for a certain time and return it. An essential feature of commodatum is that it is
gratuitous. Another feature of commodatum is that the use of the thing belonging to another is for a certain
period. Thus, the bailor cannot demand the return of the thing loaned until after expiration of the period
stipulated, or after accomplishment of the use for which the commodatum is constituted. If the bailor should
have urgent need of the thing, he may demand its return for temporary use. If the use of the thing is merely
tolerated by the bailor, he can demand the return of the thing at will, in which case the contractual relation is
called a precarium. Under the Civil Code, precarium is a kind of commodatum. The Kasunduan reveals that
the accommodation accorded by Pajuyo to Guevarra was not essentially gratuitous. While the Kasunduan
did not require Guevarra to pay rent, it obligated him to maintain the property in good condition. The
imposition of this obligation makes the Kasunduan a contract different from a commodatum. The effects of
the Kasunduan are also different from that of a commodatum. Case law on ejectment has treated
relationship based on tolerance as one that is akin to a landlord-tenant relationship where the withdrawal of
permission would result in the termination of the lease. The tenants withholding of the property would then
be unlawful.

PRODUCERS BANK V. CA
FACTS:
Sometime in 1979, private respondent Franklin Vives was asked by his neighbor and friend Angeles
Sanchez to help her friend and townmate, Col. Arturo Doronilla, in incorporating his business, the Sterela
Marketing and Services (Sterela for brevity). Specifically, Sanchez asked private respondent to deposit in
a bank a certain amount of money in the bank account of Sterela for purposes of its incorporation. She
assured private respondent that he could withdraw his money from said account within a months time. With
this, Mrs. Vivies, Sanchez and a certain Estrella Dumagpi, secretary of Doronilla, went to the bank to open
an account with Mrs. Vives and Sanchez as signatories. A passbook was then issued to Mrs. Vives.
Subsequently, private respondent learned that part of the money was withdrawn without presentment of the
passbook as it was his wife got hold of such. Mrs. Vives could not also withdraw said remaining amount
because it had to answer for some postdated checks issued by Doronilla who opened a current account for
Sterela and authorized the bank to debit savings.
Private respondent referred the matter to a lawyer, who made a written demand upon Doronilla for the
return of his clients money. Doronilla issued another check for P212,000.00 in private respondents favor
but the check was again dishonored for insufficiency of funds.
Private respondent instituted an action for recovery of sum of money in the Regional Trial Court (RTC) in
Pasig, Metro Manila against Doronilla, Sanchez, Dumagpi and petitioner. The RTC ruled in favor of the
private respondent which was also affirmed in toto by the CA. Hence this petition.
ISSUE: WON THE TRANSACTION BETWEEN THE DORONILLA AND RESPONDENT VIVES WAS ONE
OF SIMPLE LOAN.

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HELD: NO.
A circumspect examination of the records reveals that the transaction between them was a commodatum.
Article 1933 of the Civil Code distinguishes between the two kinds of loans in this wise:
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.
The foregoing provision seems to imply that if the subject of the contract is a consumable thing, such as
money, the contract would be a mutuum. However, there are some instances where a commodatum may
have for its object a consumable thing. Article 1936 of the Civil Code provides:
Consumable goods may be the subject of commodatum if the purpose of the contract is not the
consumption of the object, as when it is merely for exhibition.
Thus, if consumable goods are loaned only for purposes of exhibition, or when the intention of the parties is
to lend consumable goods and to have the very same goods returned at the end of the period agreed upon,
the loan is a commodatum and not a mutuum.
The rule is that the intention of the parties thereto shall be accorded primordial consideration in determining
the actual character of a contract. In case of doubt, the contemporaneous and subsequent acts of the
parties shall be considered in such determination.
MINA, ET AL. V. RUPERTA PASCUAL, ET AL.
G.R. No. L-8321; October 14, 1913
FACTS:
Francisco Fontanilla owns a lot located in Laoag, Ilocos Norte. Andres Fontanilla, Franciscos brother,
erected a warehouse on a part of the said lot, embracing 14 meters of its frontage by 11 meters of its depth.
Francisco Fontanilla, the former owner of the lot, being dead, was represented by herein plaintiffs. Andres
Fontanilla, the former owner of the warehouse, also having died, was represented by Ruperta Pascual and
her children. Ruperta Pascual, as the guardian of her minor children, petitioned the Court of First Instance
of Ilocos Norte for authorization to sell "the six-sevenths of the one-half of the warehouse, of 14 by 11
meters, together with its lot." The plaintiffs opposed the petition of Ruperta Pascual for the reason that the
latter had included therein the lot occupied by the warehouse, which they claimed was their exclusive
property. The warehouse, together with the lot on which it stands, was sold to Cu Joco, the other defendant
in this case. The plaintiff appealed to the Supreme Court for the determination of the ownership of the
property. The Supreme Court ruled in the plaintiffs favor. Plaintiffs commenced an action for the purpose of
having the sale of the said lot declared null and void and of no force and effect.
ISSUE:
Whether or not the sale is null and void.
RULING:
YES. The nullity of the sale of the lot is in all respects quite evident, whatsoever be the manner in which the
sale was effected, whether judicially or extrajudicially. He who has only the use of a thing cannot validly sell
the thing itself. The effect of the sale being a transfer of the ownership of the thing, it is evident that he who
has only the mere use of the thing cannot transfer its ownership. The sale of a thing effected by one who is
not its owner is null and void. The defendants never were the owners of the lot sold. The sale of it by them
is necessarily null and void. On cannot convey to another what he has never had
himself. The Court interpreted the following agreement entered into by plaintiffs and defendants:
9. That the herein plaintiffs excepted to the judgment and appealed therefrom to the Supreme Court which
found for them by holding that they are the owners of the lot in question, although there existed and still
exists a commodatum by virtue of which the guardianship (meaning the defendants) had and has the use,

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and the plaintiffs the ownership, of the property, with no finding concerning the decree of the lower court
that ordered the sale. While plaintiffs were found to be the owners of the lot, the Court recognized the
existence of a commodatum under which the defendants held the lot. Nothing could be more inexact.
Possibly, also, the meaning of that clause is that, notwithstanding the finding made by the Supreme Court
that the plaintiffs were the owners, these former and the defendants agree that there existed, and still
exists, a commodatum. What is essentially pertinent to the case is the fact that the defendant agree that the
plaintiffs have the ownership, and they themselves only the use, of the said lot.
DELOS SANTOS V. JARRA
G.R. No. L-4150 February 10, 1910[Torres, J.:]
Facts: Plaintiff owned 10 1st class carabaos which he lent to his father-in-law Jimenea without
compensation upon the condition that they shall be returned after the work at the latters mill is terminated.
Plaintiff then demanded the return of the animals since the work at the mill has been done already but
Jimenea refused. When Jimenea died, defendant Jarra was placed as administatrix of Jimeneas estate
Issue: W/N the contracts is one of a commodatum
Ruling: YES. The carabaos were loaned or given on commodatum as these were delivered to be used by
defendant. When the defendant failed to return them upon demand, he is under the obligation to indemnify
the plaintiff by paying him their value. Since the 6 carabaos were not the property of the deceased or of any
of his descendants, it is the duty of the administratrix of the estateto return them or indemnify the owner for
their value.
RP v. BAGTAS
FACTS:
May 8, 1948: Jose V. Bagtas borrowed from the Republic of the Philippines through the Bureau of Animal
Industry three bulls: a Red Sindhi with a book value of P1,176.46, a Bhagnari, of P1,320.56 and a
Sahiniwal, of P744.46, for a period of 1 year for breeding purposes subject to a breeding fee of 10% of the
book value of the bulls
May 7, 1949: Jose requested for a renewal for another year for the three bulls but only one bull was
approved while the others are to be returned
March 25, 1950: He wrote to the Director of Animal Industry that he would pay the value of the 3 bulls
October 17, 1950: he reiterated his desire to buy them at a value with a deduction of yearly depreciation to
be approved by the Auditor General.
October 19, 1950: Director of Animal Industry advised him that either the 3 bulls are to be returned or their
book value without deductions should be paid not later than October 31, 1950 which he was not able to do
December 20, 1950: An action at the CFI was commenced against Jose praying that he be ordered to
return the 3 bulls or to pay their book value of P3,241.45 and the unpaid breeding fee of P199.62, both with
interests, and costs
July 5, 1951: Jose V. Bagtas, through counsel Navarro, Rosete and Manalo, answered that because of the
bad peace and order situation in Cagayan Valley, particularly in the barrio of Baggao, and of the pending
appeal he had taken to the Secretary of Agriculture and Natural Resources and the President of the
Philippines, he could not return the animals nor pay their value and prayed for the dismissal of the
complaint.
RTC: granted the action
December 1958: granted an ex-parte motion for the appointment of a special sheriff to serve the writ
outside Manila
December 6, 1958: Felicidad M. Bagtas, the surviving spouse of Jose who died on October 23, 1951 and
administratrix of his estate, was notified
January 7, 1959: she file a motion that the 2 bulls where returned by his son on June 26, 1952 evidenced
by recipt and the 3rd bull died from gunshot wound inflicted during a Huk raid and prayed that the writ of
execution be quashed and that a writ of preliminary injunction be issued.
ISSUE: W/N the contract is commodatum and NOT a lease and the estate should be liable for the loss due
to force majeure due to delay.
HELD: YES. writ of execution appealed from is set aside, without pronouncement as to costs
If contract was commodatum then Bureau of Animal Industry retained ownership or title to the bull it should
suffer its loss due to force majeure. A contract of commodatum is essentially gratuitous. If the breeding fee
be considered a compensation, then the contract would be a lease of the bull. Under article 1671 of the
Civil Code the lessee would be subject to the responsibilities of a possessor in bad faith, because she had

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continued possession of the bull after the expiry of the contract. And even if the contract be commodatum,
still the appellant is liable if he keeps it longer than the period stipulated
the estate of the late defendant is only liable for the sum of P859.63, the value of the bull which has not
been returned because it was killed while in the custody of the administratrix of his estate
Special proceedings for the administration and settlement of the estate of the deceased Jose V. Bagtas
having been instituted in the CFI, the money judgment rendered in favor of the appellee cannot be enforced
by means of a writ of execution but must be presented to the probate court for payment by the appellant,
the administratrix appointed by the court.
CATHOLIC VICAR VS. CA
Facts:
- 1962: Catholic Vicar Apostolic of the Mountain Province (Vicar), petitioner, filed with the court an
application for the registration of title over lots 1, 2, 3 and 4 situated in Poblacion Central, Benguet, said lots
being used as sites of the Catholic Church, building, convents, high school building, school gymnasium,
dormitories, social hall and stonewalls.
- 1963: Heirs of Juan Valdez and Heirs of Egmidio Octaviano claimed that they have ownership over lots 1,
2 and 3. (2 separate civil cases)
- 1965: The land registration court confirmed the registrable title of Vicar to lots 1 , 2, 3 and 4. Upon appeal
by the private respondents (heirs), the decision of the lower court was reversed. Title for lots 2 and 3 were
cancelled.
- VICAR filed with the Supreme Court a petition for review on certiorari of the decision of the Court of
Appeals dismissing his application for registration of Lots 2 and 3.
- During trial, the Heirs of Octaviano presented one (1) witness, who testified on the alleged ownership of
the land in question (Lot 3) by their predecessor-in-interest, Egmidio Octaviano; his written demand to Vicar
for the return of the land to them; and the reasonable rentals for the use of the land at P10,000 per month.
On the other hand, Vicar presented the Register of Deeds for the Province of Benguet, Atty. Sison, who
testified that the land in question is not covered by any title in the name of Egmidio Octaviano or any of the
heirs. Vicar dispensed with the testimony of Mons. Brasseur when the heirs admitted that the witness if
called to the witness stand, would testify that Vicar has been in possession of Lot 3, for 75 years
continuously and peacefully and has constructed permanent structures thereon.
Issue: WON Vicar had been in possession of lots 2 and 3 merely as bailee borrower in commodatum, a
gratuitous loan for use.
Held: YES.
Private respondents were able to prove that their predecessors' house was borrowed by petitioner Vicar
after the church and the convent were destroyed. They never asked for the return of the house, but when
they allowed its free use, they became bailors in commodatum and the petitioner the bailee.
The bailees' failure to return the subject matter of commodatum to the bailor did not mean adverse
possession on the part of the borrower. The bailee held in trust the property subject matter of commodatum.
The adverse claim of petitioner came only in 1951 when it declared the lots for taxation purposes. The
action of petitioner Vicar by such adverse claim could not ripen into title by way of ordinary acquisitive
prescription because of the absence of just title.
The Court of Appeals found that petitioner Vicar did not meet the requirement of 30 years possession for
acquisitive prescription over Lots 2 and 3. Neither did it satisfy the requirement of 10 years possession for
ordinary acquisitive prescription because of the absence of just title. The appellate court did not believe the
findings of the trial court that Lot 2 was acquired from Juan Valdez by purchase and Lot 3 was acquired
also by purchase from Egmidio Octaviano by petitioner Vicar because there was absolutely no
documentary evidence to support the same and the alleged purchases were never mentioned in the
application for registration.
MARGARITA QUINTOS AND ANGEL A. ANSALDO VS. BECK
G.R. No. L-46240; November 3, 1939
FACTS:
The defendant was a tenant of the plaintiff and as such occupied the latter's house on M. H. del Pilar street,
No. 1175. On January 14, 1936, upon the novation of the contract of lease between the plaintiff and the

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defendant, the former gratuitously granted to the latter the use of the furniture, subject to the condition that
the defendant would return them to the plaintiff upon the latter's demand. The plaintiff sold the property to
Maria Lopez and Rosario Lopez and on September 14, 1936, these three notified the defendant of the
conveyance, giving him sixty days to vacate the premises. Thereafter, the plaintiff required the defendant to
return all the furniture transferred to him for them in the house where they were found on several instances.
The plaintiff refused to get the furniture in view of the fact that the defendant had declined to make delivery
of all of them. On November 15, before vacating the house, the defendant deposited with the Sheriff all the
furniture belonging to the plaintiff and they are now on deposit in the warehouse in the custody of the said
sheriff.
ISSUES:
1. Whether or not the defendant complied with his obligation to return the furniture upon the plaintiff's
demand;
2. Whether or not plaintiff is bound to bear the deposit fees thereof, and whether she is entitled to the costs
of litigation.
RULING:
The contract entered into between the parties is one of commadatum, because under it the plaintiff
gratuitously granted the use of the furniture to the defendant, reserving for herself the ownership thereof; by
this contract the defendant bound himself to return the furniture to the plaintiff, upon the latters demand.
The obligation voluntarily assumed by the defendant to return the furniture upon the plaintiff's demand,
means that he should return all of them to the plaintiff at the latter's residence or house. The defendant did
not comply with this obligation when he merely placed them at the disposal of the plaintiff, retaining for his
benefit the three gas heaters and the four eletric lamps.
As the defendant had voluntarily undertaken to return all the furniture to the plaintiff, upon the latter's
demand, the Court could not legally compel her to bear the expenses occasioned by the deposit of the
furniture at the defendant's behest. The latter, as bailee, was not entitled to place the furniture on deposit;
nor was the plaintiff under a duty to accept the offer to return the furniture, because the defendant wanted
to retain the three gas heaters and the four electric lamps.
The costs in both instances should be borne by the defendant because the plaintiff is the prevailing party
(Sec. 487 of the Code of Civil Procedure). The defendant was the one who breached the contract of
commodatum, and without any reason he refused to return and deliver all the furniture upon the plaintiff's
demand. In these circumstances, it is just and equitable that he pay the legal expenses and other judicial
costs which the plaintiff would not have otherwise defrayed.
BPI INVESTMENT CORP V. CA (2002)
Facts:
Frank Roa obtained a loan with interest rate of 16 1/4%/annum from Ayala Investment and Development
Corporation (AIDC), the predecessor of BPI Investment Corp. (BPIIC), for the construction of a house on
his lot in New Alabang Village, Muntinlupa.
He mortgaged the house and lot to AIDC as security for the loan.
1980: Roa sold the house and lot to ALS Management & Development Corp. and Antonio Litonjua for
P850K who paid P350K in cash and assumed the P500K indebtness of ROA with AIDC.
AIDC proposed to grant ALS and Litonjua a new loan for P500K with interested rate of 20%/annum and
service fee of 1%/annum on the outstanding balance payable within 10 years through equal monthly
amortization of P9,996.58 and penalty interest of 21%/annum/day from the date the amortization becomes
due and payable.
March 1981: ALS and Litonjua executed a mortgage deed containing the new stipulation with the provision
that the monthly amortization will commence on May 1, 1981
August 13, 1982: ALS and Litonjua paid BPIIC P190,601.35 reducing the P500K principal loan to
P457,204.90.
September 13, 1982: BPIIC released to ALS and Litonjua P7,146.87, purporting to be what was left of their
loan after full payment of Roas loan
June 1984: BPIIC instituted foreclosure proceedings against ALS and Litonjua on the ground that they
failed to pay the mortgage indebtedness which from May 1, 1981 to June 30, 1984 amounting to
P475,585.31

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August 13, 1984: Notice of sheriff's sale was published
February 28, 1985: ALS and Litonjua filed Civil Case No. 52093 against BPIIC alleging that they are not in
arrears and instead they made an overpayment as of June 30, 1984 since the P500K loan was only
released September 13, 1982 which marked the start of the amortization and since only P464,351.77 was
released applying legal compensation the balance of P35,648.23 should be applied to the monthly
amortizations
RTC: in favor of ALS and Litonjua and against BPIIC that the loan granted by BPI to ALS and Litonjua was
only in the principal sum of P464,351.77 and awarding moral damages, exemplary damages and attorneys
fees for the publication
CA: Affirmed reasoning that a simple loan is perfected upon delivery of the object of the contract which is
on September 13, 1982
ISSUE: W/N the contract of loan was perfected only on September 13, 1982 or the second release of the
loan?
HELD: YES. AFFIRMED WITH MODIFICATION as to the award of damages. The award of moral and
exemplary damages in favor of private respondents is DELETED, but the award to them of attorneys fees
in the amount of P50,000 is UPHELD. Additionally, petitioner is ORDERED to pay private respondents
P25,000 as nominal damages. Costs against petitioner.
obligation to pay commenced only on October 13, 1982, a month after the perfection of the contract
contract of loan involves a reciprocal obligation, wherein the obligation or promise of each party is the
consideration for that of the other. It is a basic principle in reciprocal obligations that neither party incurs in
delay, if the other does not comply or is not ready to comply in a proper manner with what is incumbent
upon him. Consequently, petitioner could only demand for the payment of the monthly amortization after
September 13, 1982 for it was only then when it complied with its obligation under the loan contract.
BPIIC was negligent in relying merely on the entries found in the deed of mortgage, without checking and
correspondingly adjusting its records on the amount actually released and the date when it was released.
Such negligence resulted in damage for which an award of nominal damages should be given
SSS where we awarded attorneys fees because private respondents were compelled to litigate, we sustain
the award of P50,000 in favor of private respondents as attorneys fees.
YONG CHAN KIM, Petitioner, vs. PEOPLE OF THE PHILIPPINES, HON. EDGAR D. GUSTILO
Presiding Judge, RTC, 6th Judicial Region, Branch 28 Iloilo City and COURT OF APPEALS (13th
Division), SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER AQUACULTURE DEPARTMENT
(SEAFDEC), Respondents.
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. Under this travel order, 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. For
this travel order, 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. In sum, the total amount in the form of per diems and allowances
charged and collected by petitioner under Travel Order No. 2222, when he did not actually and physically
travel as represented by his liquidation papers, was P1,230.00.
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.

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In September 1983, two (2) complaints for Estafa were filed against the petitioner before the Municipal
Circuit Trial Court at Guimbal, Iloilo.
ISSUE:
Whether or not petitioner can be held criminally liable on the ground of failure to liquidate her traveling
expenses. NO.
RULING:
It is undisputed that petitioner received a cash advance from private respondent SEAFDEC to defray his
travel expenses under T.O. 2222. It is likewise admitted that within the period covered by T.O. 2222,
petitioner was recalled to the head station in Iloilo and given another assignment which was covered by
T.O. 2268. The dispute arose when petitioner allegedly failed to return P1,230.00 out of the cash advance
which he received under T.O. 2222. For the alleged failure of petitioner to return the amount of P1,230.00,
he was charged with the crime of Estafa under Article 315, par. 1(b) of the Revised Penal Code.
In order that a person can be convicted under the above-quoted provision, it must be proven that he had
the obligation to deliver or return the same money, good or personal property that he had received. Was
petitioner under obligation to return the same money (cash advance) which he had received? We believe
not.
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 . . . 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.
The ruling of the trial judge that ownership of the cash advanced to the petitioner by private respondent was
not transferred to the latter is erroneous. Ownership of the money was transferred to the petitioner.
Since ownership of the money (cash advance) was transferred to petitioner, no fiduciary relationship was
created. Absent this fiduciary relationship between petitioner and private respondent, which is an essential
element of the crime of estafa by misappropriation or conversion, petitioner could not have committed
estafa.
Additionally, it has been the policy of private respondent that all cash advances not liquidated are to be
deducted correspondingly from the salary of the employee concerned. The evidence shows that the
corresponding salary deduction was made in the case of petitioner vis-a-vis the cash advance in question.
(Failure of bank to return the amount deposited, not a case of estafa)
SPOUSES TAN vs. VILLAPAZ
G.R. No. 160892 November 22, 2005

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Facts:
Villapaz 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. Tan failed to settle the same, and despite repeated demands, petitioners never did.
Villapaz filed before RTC Digos a Complaint for sum of money against Tan alleging that Tan repaired to his
home and obtained a loan of P250K, 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, Tan failed to
settle the same.
Tans defense: (1) He denied going to Villapazs home. The check was issued by Villapaz in Davao City on
February 6, 1992 in exchange for equivalent cash and that they never received from respondent any
demand for payment. (2) A contract of loan must be in writing as in fact the New Civil Code provides that to
be enforceable contracts where the amount involved exceed[s] P500.00 must appear in writing even a
private one. (3) Mere encashment of the check is not a contractual transaction such as a sale or a loan
which ordinarily requires a receipt and that explains why they did not issue a receipt when they encashed
the check of respondent. (4) He has a P950K account in a bank, bakit pa daw siya mangungutang kay
Villapaz?!
According to Tan, Villapaz went to his place of business to encash his check of P250K, so he asked his wife
to bring P250K cash and give it in exchange of the check.
Villapazs contention: (1) No memorandum in writing of the transaction was executed because he and they
are kumpadres.
RTC dismissed the case but credited damages. CA reverse and found for Villapaz. According to CA, the
existence of a contract of loan cannot be denied merely because it is not reduced in writing. Requirement
under Art 1358 is only for convenience, not for validity.
Issue: WON the transaction in dispute was a contract of loan and not a mere matter of check encashment?
Held:
Yes. At all events, a check, the entries of which are no doubt in writing, could prove a loan transaction.
Petitioner Antonio Tans foregoing tale hardly inspires credence. Villapaz did not have to encash his check
from petitioners. PBCom Davao City, Monteverde branch where respondent maintained a current account
could even be reached by foot from the Golden Harvest in just a few minutes. Respondent could just have
gone there and drew cash from his current account via over the counter transaction. After all, his account
had sufficient funds.
That petitioner Tan had an outstanding balance of more than P950Kin his account at PBCom Monteverde
branch where he was later to deposit respondents 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.
Petitioners side of the case is incredible as it is inconsistent with the principles by which men similarly
situated are governed, whereas respondents 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.