BPI Investment Corp vs CA

Facts:
Roa obtained a loan from AIDC for the construction of his house.The 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 to
AIDC. AIDC was not willing to extend the old interest to Roa and proposed a grant of
new loan with higher interest to be applied to Roa’s debt, secured by the same property.
Respondent executed a mortgage deed containing the stipulation. When the full loan
was released to private respondents. BPIIC, AIDC’s predecessor, released to private
respondents payment to 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.
Ruling:
No. 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 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 is a proper manner with
what is incumbent upon him. Hence, in this case it is a real contract.