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BPI INVESTMENT CORPORATION v. CA

FACTS:

Frank Roa obtained a loan from Ayala Investment and Development Corporation (AIDC) for the construction of a house. Roa sold the house and lot to ALS Management and Development Corporation and Antonio Litonjua, who assumed Roa's loan with AIDC. AIDC proposed a new loan for private respondents at a higher interest rate. Private respondents executed a mortgage deed with BPI Investment Corporation (BPIIC), securing the new loan. BPIIC released the balance of the loan to private respondents in 1982. In 1984, BPIIC initiated foreclosure proceedings against private respondents for alleged nonpayment of mortgage indebtedness. Private respondents filed a case against BPIIC, claiming that they were not in arrears and had actually made an overpayment. The trial court ruled in favor of private respondents, awarding them damages and dismissing the foreclosure suit. Both parties appealed to the Court of Appeals, which affirmed the trial court's decision. BPIIC filed this petition for certiorari, raising issues on the perfection of the loan contract and the liability for damages.

ISSUES:

  1. Whether the loan contract between BPI and ALS and Litonjua was perfected on March 31, 1981 or on September 13, 1982, and whether private respondents incurred in delay in commencing the payment of the monthly amortization.

  2. Whether the starting date for computing the amount due for foreclosure is May 1, 1981 or October 13, 1982.

  3. Whether the petitioner should be held liable for moral and exemplary damages.

RULING:

  1. The loan contract was perfected on September 13, 1982, the date of the second release of the loan. Private respondents did not incur in delay in commencing the payment of the monthly amortization.

  2. The starting date for computing the amount due for foreclosure is October 13, 1982, and not May 1, 1981.

  3. The petitioner is not held liable for moral and exemplary damages but is liable for nominal damages in the amount of P25,000 and attorney's fees in the amount of P50,000.

PRINCIPLES:

  • A loan contract is a real contract, which is perfected only upon the delivery of the object of the contract.

  • A perfected consensual contract can give rise to an action for damages, but it does not constitute the real contract of loan which requires the delivery of the object of the contract for its perfection.

  • 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.

  • 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.

  • When a loan contract provides for a specific condition to be fulfilled by the borrower, the starting date for computing amounts due is from the fulfillment of that condition.

  • On a petition for review under Rule 45, only questions of law can be raised, not factual matters.

  • Negligence in relying solely on entries found in a deed of mortgage without checking and adjusting records can result in liability for nominal damages.

  • The filing alone of foreclosure proceedings is not a ground for an award of moral damages, but nominal damages and attorney's fees may still be awarded.