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BPI Investment Corporation vs. Court of Appeals, 377 SCRA 117, February 15, 2002

1. This case discusses a loan obtained by Frank Roa from Ayala Investment and Development Corporation (AIDC) to construct a house, which he later sold to ALS Management & Development Corporation and Antonio Litonjua, who assumed the remaining loan balance. AIDC did not extend the original interest rate and instead offered a new loan at a higher 20% interest rate. [2] AIDC later attempted to foreclose on the property for non-payment, but the courts ruled that the loan was not considered a consensual contract until funds were delivered, making the interest calculation and foreclosure premature. [3] The Supreme Court affirmed but removed awards for moral and exemplary damages, upholding attorney's fees

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104 views2 pages

BPI Investment Corporation vs. Court of Appeals, 377 SCRA 117, February 15, 2002

1. This case discusses a loan obtained by Frank Roa from Ayala Investment and Development Corporation (AIDC) to construct a house, which he later sold to ALS Management & Development Corporation and Antonio Litonjua, who assumed the remaining loan balance. AIDC did not extend the original interest rate and instead offered a new loan at a higher 20% interest rate. [2] AIDC later attempted to foreclose on the property for non-payment, but the courts ruled that the loan was not considered a consensual contract until funds were delivered, making the interest calculation and foreclosure premature. [3] The Supreme Court affirmed but removed awards for moral and exemplary damages, upholding attorney's fees

Uploaded by

Robinson Mojica
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Mojica, Robinson S.

Loan (Mutuum)
Credit Transactions / 2E Articles 1934, New Civil Code
Case Digest BPI Investment Corporation vs. Court of Appeals

BPI Investment Corporation vs. Hon. Court of Appeals and ALS Management &
Development Corporation
G.R. No. 133632, 15 February 2002

FACTS:

Frank Roa obtained a loan at an interest rate of 16 ¼% per annum from Ayala Investment
and Development Corporation (AIDC), the predecessor of herein petitioner, for the
construction of a house on his lot in Muntinlupa. Said house and lot were mortgaged to AIDC
to secure the loan. Sometime in 1980, Roa sold the house and lot to private respondents
ALS and Antonio Litonjua for P850,000.00. They paid P350,000.00 in cash and assumed the
P500,000.00 balance of Roa’s indebtedness with AIDC. The latter, however, was not willing
to extend the old interest rate to private respondents and proposed to grant them a new loan
of P500,000.00 to be applied to Roa’s debt and secured by the same property, at an interest
rate of 20% per annum. 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. Some years thereafter, BPIIC
instituted foreclosure proceedings against private respondents on the ground that they failed
to pay the mortgage indebtedness amounting to P475,585.31. Private respondents filed a
civil case against BPIIC, alleging that they were not in arrears in their payment. The trial
court dismissed the foreclosure suit. The Court of Appeals affirmed the decision.

ISSUE:

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

RULING:

NO. A loan contract is not a consensual contract but a real contract, perfected only upon the
delivery of the object of the contract. Petitioner misapplied Bonnevie. The contract in
Bonnevie declared by the Court as a perfected consensual contract falls under the first
clause of Article 1934, Civil Code. It is an accepted promise to deliver something by way of
simple loan.

A perfected consensual contract can give rise to an action for damages. However, said
contract does not constitute the real contract of loan which requires the delivery of the object
of the contract for its perfection and which gives rise to obligations only on the part of the
borrower.

In the present case, the loan contract between BPI, on the one hand, and ALS and Litonjua,
on the other, was perfected only on 13 September 1982, the date of the second release of
the loan. Following the intentions of the parties on the commencement of the monthly
amortization, as found by the Court of Appeals, private respondents’ obligation to pay
commenced only on 13 October 1982, a month after the perfection of the contract.

A 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.
Mojica, Robinson S. Loan (Mutuum)
Credit Transactions / 2E Articles 1934, New Civil Code
Case Digest BPI Investment Corporation vs. Court of Appeals

DISPOSITION:

WHEREFORE, the decision dated February 28, 1997, of the Court of Appeals and its
resolution dated April 21, 1998, are 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 attorney’s 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.

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