BPI vs Court of Appeals and ALS

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

 credit transactions: Loan (Mutuum): A loan contract is not a consensual contract but
a real contract. It is perfected upon delivery of the object of the contract.
 obligations and contracts: Reciprocal Obligations: 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.

FACTS:

Frank Roa obtained a loan at 16 1/4% interest rate per annum from Ayala Investment and
Development Corporation. For security, Roa's house and lot were mortgaged. Later, Roa
sold the house and lot to ALS and Antonio Litonjua, who assumed Roa's debt to Ayala
Investment. Ayala Investment, however, 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.

When ALS and Litonjua failed to pay, BPIIC, successor to Ayala Investment, filed for
foreclosure of mortgage.

ISSUE:

 W/N a contract of loan is a consensual contract

HELD:

A loan contract is not a consensual contract but a real contract. It is perfected upon 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 the present case, the loan contract was only perfected on the date of the second release
of the loan.
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. 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.

DECISION:

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.