G.R. No. L-66272 October 17, 1986
SEE BAN, petitioner, vs. THE INTERMEDIATE APPELLATE COURT, THE REGIONAL TRIAL COURT OF MANILA, BRANCH XI, and LU IT, respondents.

FACTS

Petitioner See Ban and private respondent Lu It were close friends. Lu It organized mahjong sessions for recreation, which See Ban regularly attended. Between April and June 1975, See Ban repeatedly borrowed money from Lu It, totaling P16,750.00, to pay off his mahjong losses to other players. He promised to repay on demand and made a partial payment of P1,050.00, leaving a balance of P15,700.00. After repeated demands, Lu It, accompanied by his friend Judge Ernesto Madamba and another individual, confronted See Ban at his business establishment in December 1977. Before witnesses, See Ban acknowledged the debt and promised payment within a week, which he failed to do, prompting Lu It to file a collection suit.
See Ban denied borrowing any money. He claimed he was solvent, with money in the bank and his own business, and argued that Lu It, as a mere trucking agent, had no substantial funds to lend. He did not directly deny the meeting with Judge Madamba. His defense centered on the allegation that the claimed indebtedness was actually a gambling debt incurred directly with Lu It from the mahjong sessions, which would be void under the law. Both the trial court and the Intermediate Appellate Court ruled in favor of Lu It.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s decision that the debt of P15,700.00 is a valid and collectible loan, and not an unenforceable gambling loss under Article 2014 of the Civil Code.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ decisions. The legal logic is clear. First, the factual findings of the trial court, affirmed by the Appellate Court, are conclusive. These findings, based on witness credibility, established that See Ban borrowed money from Lu It to pay other winners, not to pay losses directly to Lu It as a game participant. The testimony of Judge Madamba, which See Ban did not rebut, crucially confirmed See Ban’s acknowledgment of the loan.
Second, Article 2014 of the Civil Code, which bars the winner from collecting winnings and allows the loser to recover losses from the winner, is inapplicable. Lu It’s cause of action is not to collect gambling winnings from See Ban. He sued to enforce a loan agreement where the borrowed funds were used to settle separate gambling obligations. The contract of loan is distinct from the gambling contracts between See Ban and the other players. The purpose for which a loan is used does not invalidate the loan itself, provided it is not for an illegal purpose that makes the loan void. Paying a pre-existing debt, even a gambling debt, is not an illegal purpose that nullifies the loan contract. Therefore, the debt is valid and collectible.