[G.R. No. 133632.

February 15, 2002]

BPI INVESTMENT CORPORATION, petitioner, vs. HON. COURT OF APPEALS and
ALS MANAGEMENT & DEVELOPMENT CORPORATION, respondents
Ayala Investment Dev't Corp - predecessor of BPI Investment Corp
LOAN: Simple Mutuum - A contract of loan is a Real Contract.

FACTS:
Frank Roa obtained a loan for the construction of his house in Muntinlupa from Ayala
Investment Dev't Corp @ an interest rate of 16.25%/annum. The said house and lot was
later on mortgaged to AIDC.
1980 - Roa sold the house and lot to ALS Mgmt & Dev't Corp and Litonjua for P850K.
They had paid P350k to Roa and assumed the P500K balance of the Roas to AIDC.
However, AIDC is no longer willing to extend the old interest rate to ALS so, it proposed
that ALS can be granted P500K loan to be applied in Roa's debt and secured by the same
property with an interest of 20%/annum and 1% service charge/annum payable within 10
years in monthly amortizations. (P9996.58) Note: ALS and Litonjua have executed a
mortgage deed containing the above stipulations.
After the full payment of the loan of Roa by ALS and Litonjua, BPIIC gave P7146.87 to
them purporting to be what was left of their loan.
1984 - BPIIC instituted foreclosure proceedings against ALS and Litonjua on the ground
that they failed to pay mortgage indebtedness from May 1981 to June 1984 amounting to
P475585.31.
1985 - ALS and Litonjua filed a civil case against BPIIC alleging that they were not in
arrear in their payment but in fact made overpayment. They maintained that they should
not be made to pay amortization before the actual release of the P500K loan in 1982.
Also, they have only received P464351.77 out of the P500k hence by way of legal
compensation, the remaining balance of P35K+ should have been applied in their initial
monthly amortization.
TC: ruled in favor of ALS and Litonjua. Compensable damages (P300K moral damesges,
P50K exemplary damages & P50K for Atty fees and litigation expenses)were also
awarded to ALS and Litonjua when BPI caused their publication in a newspaper of general
circulation as defaulting debtors. Foreclosure suit was also dismissed.
Appeal to the CA: decision of the RTC affirmed in toto. Reasoning that simple loan is
only perfected only upon the delivery of the object of the contract.
MR of BPIIC was denied hence, this petition for Certiorari

ISSUE:
WoN 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 contracts. BPIIC misapplied Bonnevie vs CA. The contract
in Bonnevie declared by the Court as a perfected consensual contract falls under the first
clause of A1934 of CC. It is an accepted promise to deliver something by way of simple
loan.
Hence, the loan contract of BPIIC and ALS & Litonjua was perfected only on Sept 1982 ,
the date of second release of the loan. Following the intention of the parties, ALS is only
obliged to pay on Oct 1982, a month after the perfection of the contract.
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. 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 he fails, then default sets in.
Fallo: 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 attorneys 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.