CORONA, J.

Assailed in this petition for review on certiorari are the June 19, 2002 decision and August 20, 2002 resolution of the
Court of Appeals (CA) in CA-G.R. CV No. 56577 which set aside the February 28, 1997 decision of the Regional Trial
Court (RTC) of Makati City, Branch 58.

Sometime in February 1995, respondent Rica Marie S. Thio received from petitioner Carolyn M. Garcia a crossed
check dated February 24, 1995 in the amount of US$100,000 payable to the order of a certain Marilou
Santiago.Thereafter, petitioner received from respondent every month (specifically, on March 24, April 26, June 26
and July 26, all in 1995) the amount of US$3,000 and ₱76,500 on July 26, August 26, September 26 and October 26,
1995.

In June 1995, respondent received from petitioner another crossed check dated June 29, 1995 in the amount of
₱500,000, also payable to the order of Marilou Santiago. Consequently, petitioner received from respondent the
amount of ₱20,000 every month on August 5, September 5, October 5 and November 5, 1995.

According to petitioner, respondent failed to pay the principal amounts of the loans (US$100,000 and ₱500,000) when
they fell due. Thus, on February 22, 1996, petitioner filed a complaint for sum of money and damages in the RTC of
Makati City, Branch 58 against respondent, seeking to collect the sums of US$100,000, with interest thereon at 3% a
month from October 26, 1995 and ₱500,000, with interest thereon at 4% a month from November 5, 1995, plus
attorney’s fees and actual damages.

Petitioner alleged that on February 24, 1995, respondent borrowed from her the amount of US$100,000 with interest
thereon at the rate of 3% per month, which loan would mature on October 26, 1995. The amount of this loan was
covered by the first check. On June 29, 1995, respondent again borrowed the amount of ₱500,000 at an agreed
monthly interest of 4%, the maturity date of which was on November 5, 1995. The amount of this loan was covered by
the second check. For both loans, no promissory note was executed since petitioner and respondent were close
friends at the time. Respondent paid the stipulated monthly interest for both loans but on their maturity dates, she
failed to pay the principal amounts despite repeated demands.

Respondent denied that she contracted the two loans with petitioner and countered that it was Marilou Santiago to
whom petitioner lent the money. She claimed she was merely asked by petitioner to give the crossed checks to
Santiago. She issued the checks for ₱76,000 and ₱20,000 not as payment of interest but to accommodate petitioner’s
request that respondent use her own checks instead of Santiago’s.

In a decision dated February 28, 1997, the RTC ruled in favor of petitioner. It found that respondent borrowed from
petitioner the amounts of US$100,000 with monthly interest of 3% and ₱500,000 at a monthly interest of 4%:

WHEREFORE, finding preponderance of evidence to sustain the instant complaint, judgment is hereby rendered in
favor of [petitioner], sentencing [respondent] to pay the former the amount of:

1. [US$100,000.00] or its peso equivalent with interest thereon at 3% per month from October 26, 1995 until
fully paid;

2. ₱500,000.00 with interest thereon at 4% per month from November 5, 1995 until fully paid.

3. ₱100,000.00 as and for attorney’s fees; and

4. ₱50,000.00 as and for actual damages.

For lack of merit, [respondent’s] counterclaim is perforce dismissed.

With costs against [respondent].

IT IS SO ORDERED.

On appeal, the CA reversed the decision of the RTC and ruled that there was no contract of loan between the parties:

A perusal of the record of the case shows that [petitioner] failed to substantiate her claim that [respondent] indeed
borrowed money from her. There is nothing in the record that shows that [respondent] received money from
[petitioner]. What is evident is the fact that [respondent] received a MetroBank [crossed] check dated February 24,
1995 in the sum of US$100,000.00, payable to the order of Marilou Santiago and a CityTrust [crossed] check dated
June 29, 1995 in the amount of ₱500,000.00, again payable to the order of Marilou Santiago, both of which were
issued by [petitioner]. The checks received by [respondent], being crossed, may not be encashed but only
deposited in the bank by the payee thereof, that is, by Marilou Santiago herself.

It must be noted that crossing a check has the following effects: (a) the check may not be encashed but only deposited
in the bank; (b) the check may be negotiated only once—to one who has an account with the bank; (c) and the act of
crossing the check serves as warning to the holder that the check has been issued for a definite purpose so that he
must inquire if he has received the check pursuant to that purpose, otherwise, he is not a holder in due course.

Consequently, the receipt of the [crossed] check by [respondent] is not the issuance and delivery to the payee in
contemplation of law since the latter is not the person who could take the checks as a holder, i.e., as a payee or
indorsee thereof, with intent to transfer title thereto. Neither could she be deemed as an agent of Marilou Santiago
with respect to the checks because she was merely facilitating the transactions between the former and [petitioner].

With the foregoing circumstances, it may be fairly inferred that there were really no contracts of loan that existed
between the parties. x x x (emphasis supplied)
Hence this petition.

As a rule, only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court.
However, this case falls under one of the exceptions, i.e., when the factual findings of the CA (which held that there
were no contracts of loan between petitioner and respondent) and the RTC (which held that there werecontracts of
loan) are contradictory.

The petition is impressed with merit.

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 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 not
to the order of respondent but to the order of a certain Marilou Santiago. Thus the main question to be answered is:
who borrowed money from petitioner — respondent or Santiago?

Petitioner insists that it was upon respondent’s instruction that both checks were made payable to Santiago. She
maintains that it was also upon respondent’s instruction that both checks were delivered to her (respondent) so that
she could, in turn, deliver the same to Santiago. Furthermore, she argues that once respondent received the checks,
the latter had possession and control of them such that she had the choice to either forward them to Santiago (who
was already her debtor), to retain them or to return them to petitioner.

We 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. 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 amounts to Santiago.

Several factors support this conclusion.

First, respondent admitted that petitioner did not personally know Santiago. It was highly improbable that petitioner
would grant two loans to a complete stranger without requiring as much as promissory notes or any written
acknowledgment of the debt considering that the amounts involved were quite big. Respondent, on the other hand,
already had transactions with Santiago at that time.

Second, Leticia Ruiz, a friend of both petitioner and respondent (and whose name appeared in both parties’ list of
witnesses) testified that respondent’s plan was for petitioner to lend her money at a monthly interest rate of 3%, after
which respondent would lend the same amount to Santiago at a higher rate of 5% and realize a profit of 2%. This
explained why respondent instructed petitioner to make the checks payable to Santiago. Respondent has not shown
any reason why Ruiz’ testimony should not be believed.

Third, for the US$100,000 loan, respondent admitted issuing her own checks in the amount of ₱76,000 each (peso
equivalent of US$3,000) for eight months to cover the monthly interest. For the ₱500,000 loan, she also issued her
own checks in the amount of ₱20,000 each for four months. According to respondent, she merely accommodated
petitioner’s request for her to issue her own checks to cover the interest payments since petitioner was not personally
acquainted with Santiago. She claimed, however, that Santiago would replace the checks with cash. Her explanation
is simply incredible. It is difficult to believe that respondent would put herself in a position where she would be
compelled to pay interest, from her own funds, for loans she allegedly did not contract. We declared in one case 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.

Fourth, in the petition for insolvency sworn to and filed by Santiago, it was respondent, not petitioner, who was listed
as one of her (Santiago’s) creditors.

Last, respondent inexplicably never presented Santiago as a witness to corroborate her story. The presumption is that
"evidence willfully suppressed would be adverse if produced." Respondent was not able to overturn this presumption.

We hold that the CA committed reversible error when it ruled that respondent did not borrow the amounts of
US$100,000 and ₱500,000 from petitioner. We instead agree with the ruling of the RTC making respondent liable for
the principal amounts of the loans.

We do not, however, agree that respondent is liable for the 3% and 4% monthly interest for the US$100,000 and
₱500,000 loans respectively. There was no written proof of the interest payable except for the verbal agreement that
the loans would earn 3% and 4% interest per month. Article 1956 of the Civil Code provides that "[n]o interest shall
be due unless it has been expressly stipulated in writing."
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 that:

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.

Hence, respondent is liable for the payment of legal interest per annum to be computed from November 21, 1995, the
date when she received petitioner’s 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.

The award of actual damages in the amount of ₱50,000 and ₱100,000 attorney’s fees is deleted since the RTC
decision did not explain the factual bases for these damages.

WHEREFORE, the petition is hereby GRANTED and the June 19, 2002 decision and August 20, 2002 resolution of
the Court of Appeals in CA-G.R. CV No. 56577 are REVERSED and SET ASIDE. The February 28, 1997 decision of
the Regional Trial Court in Civil Case No. 96-266 is AFFIRMED with the MODIFICATION that respondent is directed
to pay petitioner the amounts of US$100,000 and ₱500,000 at 12% per annum interest from November 21, 1995 until
the finality of the decision. The total amount due as of the date of finality will earn interest of 12% perannum until fully
paid. The award of actual damages and attorney’s fees is deleted.

SO ORDERED.