BPI vs CA Credit Digest

BPI Investment Corporation

-vs-

CA

GR No. 133632, 15 February 2002

377 SCRA 117

FACTS

Frank Roa obtained a loan from Ayala Investment and Development Corporation (AIDC), for the construction of his house. Said house and lot were mortgaged to AIDC to secure the loan. Roa sold the properties to ALS and Litonjua, the latter paid in cash and assumed the balance of Roa’s indebtedness wit AIDC. AIDC was not willing to extend the old interest to private respondents and proposed a grant of new loan of P500,000 with higher interest to be applied to Roa’s debt, secured by the same property. Private respondents executed a mortgage deed containing the stipulation. The loan contract was signed on 31 March 1981 and was perfected on 13 September 1982, when the full loan was released to private respondents.

BPIIC, AIDC’s predecessor, released to private respondents P7,146.87, purporting to be what was left of their loan after full payment of Roa’s loan. BPIIC filed for foreclosure proceedings on the ground that private respondents failed to pay the mortgage indebtedness. Private respondents maintained that they should not be made to pay amortization before the actual release of the P500,000 loan. The suit was dismissed and affirmed by the CA.

ISSUE

Whether or not a contract of loan is a consensual contract.

HELD

The Court held in the negative. A loan contract is not a consensual contract but a real contract. It is perfected only upon delivery of the object of the contract. A contract o 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 is a proper manner with what is incumbent upon him