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    BPI Investment Corp V CA

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    Jona Myka Dugayo
    The Supreme Court ruled that a loan contract is not a consensual contract, but a real contract that is only perfected upon delivery of the loan amount. In this case, the loan contract between BPI Investment Corp and ALS Mgt. & Dev. Corp was perfected on September 13, 1982, when the full loan amount was released, not in May 1981 as BPI claimed. As reciprocal obligations, neither party can demand the other party's compliance until it has first complied itself. Thus, BPI could only demand payment of amortization from ALS starting in October 1982, not May 1981. The Court affirmed the lower court's ruling in favor of ALS.

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    BPI Investment Corp V CA

    Uploaded by

    Jona Myka Dugayo
    44 views2 pages
    The Supreme Court ruled that a loan contract is not a consensual contract, but a real contract that is only perfected upon delivery of the loan amount. In this case, the loan contract between BPI Investment Corp and ALS Mgt. & Dev. Corp was perfected on September 13, 1982, when the full loan amount was released, not in May 1981 as BPI claimed. As reciprocal obligations, neither party can demand the other party's compliance until it has first complied itself. Thus, BPI could only demand payment of amortization from ALS starting in October 1982, not May 1981. The Court affirmed the lower court's ruling in favor of ALS.

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    The Supreme Court ruled that a loan contract is not a consensual contract, but a real contract that is only perfected upon delivery of the loan amount. In this case, the loan contract between BPI Investment Corp and ALS Mgt. & Dev. Corp was perfected on September 13, 1982, when the full loan amount was released, not in May 1981 as BPI claimed. As reciprocal obligations, neither party can demand the other party's compliance until it has first complied itself. Thus, BPI could only demand payment of amortization from ALS starting in October 1982, not May 1981. The Court affirmed the lower court's ruling in favor of ALS.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    44 views2 pages

    BPI Investment Corp V CA

    Uploaded by

    Jona Myka Dugayo
    The Supreme Court ruled that a loan contract is not a consensual contract, but a real contract that is only perfected upon delivery of the loan amount. In this case, the loan contract between BPI Investment Corp and ALS Mgt. & Dev. Corp was perfected on September 13, 1982, when the full loan amount was released, not in May 1981 as BPI claimed. As reciprocal obligations, neither party can demand the other party's compliance until it has first complied itself. Thus, BPI could only demand payment of amortization from ALS starting in October 1982, not May 1981. The Court affirmed the lower court's ruling in favor of ALS.

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    BPI Investment Corp v Court of Appeals and ALS Mgt. & Dev. Corp.

    G.R. No. 133632 | February 15, 2002

    DOCTRINE:
    A loan contract is not a consensual contract but a real contract.
    It is perfected only upon the delivery of the object of the contract. The contract in Bonnevie is a
    perfected consensual contract under Art. 1934, which is an accepted promise to deliver
    something by way of a simple loan. A contract of loan involves a reciprocal obligation, wherein
    the obligation or promise of each part is the consideration for that of the other.
    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.

    FACTS:
    Frank Roa obtained a loan with an interest rate of 16 ¼ % per annum from Ayala Investment and
    Development Corporation, predecessor of BPIIC. To secure the loan, Roa's house and lot were
    mortgaged. Later, Roa sold the house and lot to ALS and Antonio Litonjua, who assumed Roa's
    P500,000 debt with Ayala Investment. Ayala Investment, however, was unwilling to grant ALS
    and Litonjua the same interest rate so they granted a new loan to be applied to Roa's debt,
    secured by the same property at a different interest rate of 20% per annum. The amortization for
    this loan was to begin on May 1, 1981. In Aug. 1982, BPIIC applied the loan of ALS and
    Litonjua to the balance of Roa’s debt, P457,204.90. However it was only on Sept. 13, 1982 that
    BPIIC released P7,146.87, the balance of the loan after applying the proceeds to the full payment
    of Roa’s loan.

    In June 1984, BPIIC instituted the foreclosure of mortgage alleging that ALS and Litonjua failed
    to pay their debt from May 1, 1981 up to June 30, 1984.

    On Feb. 28, 1985, ALS and Litonjua filed a civil case against BPIIC alleging that they were not
    in arrears in their payment, but they in fact made an overpayment as of June 30, 1984. They
    contend that they should not be made to pay amortization before the actual release of the
    P500,000 loan in Aug. and Sept. 1982. And that out of the P500,000 loan, only the total amount
    of P464,351.77 was released to them, thus, the balance of P35,648.23 should be applied to the
    initial monthly amortization for the loan.

    The trial court rendered a judgment in favor of ALS and Litonjua holding that the amount of loan
    granted by BPI to ALS and Litonjua was only in the principal sum of P464,351.77 and that
    suffered compensable damages when BPI caused their publication in a newspaper of general
    circulation as defaulting debtors. This was affirmed by the CA which also ruled that a simple
    loan is perfected upon the delivery of the object of the contract, thus, the loan contract in this
    case was perfected only on Sept. 13, 1982.

    BPIIC claims that a contract of loan is a consensual contract, and a loan contract is perfected at
    the time the contract of mortgage is executed.

    ISSUE:
    Whether a contract of loan is a consensual contract?

    HELD:
    NO. A loan contract is not a consensual contract but a real contract. It is perfected only upon the
    delivery of the object of the contract. Although a perfected consensual contract can give rise to
    an action for damages, it does not constitute a real contract which requires delivery for
    perfection. A perfected real contract gives rise only to obligations on the part of the borrower.

    In this case, the loan contract was only perfected on Sept. 13, 1982, which was the second
    release of the loan. The payment of amortization should accrue from the time BPIIC released the
    loan amount to ALS and Litonjua because it was only at that time (the delivery of the amount --
    the object of the contract) that the loan contract was perfected.

    A contract of loan involves a reciprocal obligation, wherein the obligation or promise of each
    party is the consideration for that of the other. In reciprocal obligations 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. It is only when a party has performed his part of the contract can he
    demand that the other party also fulfills his own obligation and if the latter fails, default sets in.

    Thus, BPIIC could only demand payment of amortization after Sept. 13, 1982 for it was only
    then that it complied with its obligation under the loan contract. Therefore, in computing the
    amount due as of the date when BPIIC extrajudicially caused the foreclosure of the mortgage, the
    starting date is Oct. 13, 1982 and not May 1, 1981.

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