SECOND DIVISION
[G.R. No. 133632.
BPI INVESTMENT CORPORATION, petitioner, vs. HON. COURT OF APPEALS and ALS MANAGEMENT & DEVELOPMENT CORPORATION, respondents.
D E C I S I O N
QUISUMBING, J.:
This petition for certiorari assails the decision dated
The trial court had held that private respondents were not in
default in the payment of their monthly amortization, hence, the extrajudicial
foreclosure conducted by BPIIC was premature and made in bad faith. It awarded private respondents the amount of P300,000
for moral damages, P50,000 for exemplary damages, and P50,000 for
attorney’s fees and expenses for litigation. It likewise dismissed the foreclosure
suit for being premature.
The facts are as follows:
Frank Roa obtained a loan at an interest rate of 16 1/4% per
annum from Ayala Investment and Development Corporation (AIDC), the predecessor
of petitioner BPIIC, for the construction of a house on his lot in P850,000. They paid P350,000 in cash and
assumed the P500,000 balance of Roa’s indebtedness with AIDC. The
latter, however, was not willing to extend the old interest rate to private
respondents and proposed to grant them a new loan of P500,000 to be
applied to Roa’s debt and secured by the same property, at an interest rate of
20% per annum and service fee of 1% per annum on the outstanding principal
balance payable within ten years in equal monthly amortization of P9,996.58
and penalty interest at the rate of 21% per annum per day from the date the amortization
became due and payable.
Consequently, in March 1981, private respondents executed a
mortgage deed containing the above stipulations with the provision that payment
of the monthly amortization shall commence on
On P190,601.35.
This reduced Roa’s principal balance to P457,204.90 which, in turn, was
liquidated when BPIIC applied thereto the proceeds of private respondents’ loan of P500,000.
On P7,146.87, purporting to be what
was left of their loan after full payment of Roa’s loan.
In June 1984, BPIIC instituted foreclosure proceedings against
private respondents on the ground that they failed to pay the mortgage
indebtedness which from P475,585.31). A notice of sheriff’s sale was published on
On P500,000 loan in
August and September 1982. Further, out of the P500,000 loan, only the
total amount of P464,351.77 was released to private respondents. Hence,
applying the effects of legal compensation, the balance of P35,648.23
should be applied to the initial monthly amortization for the loan.
On
WHEREFORE, judgment is hereby rendered in favor of ALS Management and Development Corporation and Antonio K. Litonjua and against BPI Investment Corporation, holding that the amount of loan granted by BPI to ALS and Litonjua was only in the principal sum of P464,351.77, with interest at 20% plus service charge of 1% per annum, payable on equal monthly and successive amortizations at P9,283.83 for ten (10) years or one hundred twenty (120) months. The amortization schedule attached as Annex “A” to the “Deed of Mortgage” is correspondingly reformed as aforestated.
The Court further finds that ALS and Litonjua suffered compensable damages when BPI caused their publication in a newspaper of general circulation as defaulting debtors, and therefore orders BPI to pay ALS and Litonjua the following sums:
a) P300,000.00 for and as moral damages;
b) P50,000.00 as and for exemplary damages;
c) P50,000.00 as and for attorney’s fees and expenses of litigation.
The foreclosure suit (Civil Case No. 11831) is hereby DISMISSED for being premature.
Costs against BPI.
SO ORDERED.[2]
Both parties appealed to the Court of Appeals. However, private respondents’ appeal was dismissed for non-payment of docket fees.
On
WHEREFORE, finding no error in the appealed decision the same is hereby AFFIRMED in toto.
SO ORDERED.[3]
In its decision, the Court of Appeals reasoned that a simple loan
is perfected only upon the delivery of the object of the contract. The contract of loan between BPIIC and ALS
& Litonjua was perfected only on P500,000 loan after deducting therefrom the value of Roa’s indebtedness.
Thus, payment of the monthly amortization should commence only a month after
the said date, as can be inferred from the stipulations in the contract. This,
despite the express agreement of the parties that payment shall commence on P194,960.43. Evidence showed that private
respondents had an overpayment, because as of June 1984, they already paid a
total amount of P201,791.96.
Therefore, there was no basis for BPIIC to extrajudicially foreclose the
mortgage and cause the publication in newspapers concerning private respondents’
delinquency in the payment of their loan.
This fact constituted sufficient ground for moral damages in favor of
private respondents.
The motion for reconsideration filed by petitioner BPIIC was likewise denied, hence this petition, where BPIIC submits for resolution the following issues:
I. WHETHER OR NOT A
CONTRACT OF LOAN IS A CONSENSUAL CONTRACT IN THE LIGHT OF THE RULE LAID DOWN IN
BONNEVIE VS. COURT OF APPEALS, 125 SCRA 122.
II. WHETHER OR NOT BPI
SHOULD BE HELD LIABLE FOR MORAL AND EXEMPLARY DAMAGES AND ATTORNEY’S FEES IN
THE FACE OF IRREGULAR PAYMENTS MADE BY ALS AND OPPOSED TO THE RULE LAID DOWN IN
SOCIAL SECURITY SYSTEM VS. COURT OF APPEALS, 120 SCRA 707.
On the first issue, petitioner contends that the Court of Appeals
erred in ruling that because a simple loan is perfected upon the delivery of
the object of the contract, the loan contract in this case was perfected only
on
Petitioner also argues that while the documents showed that the
loan was released only on August 1982, the loan was actually released on P500,000 loan, private respondents were
required to reduce Frank Roa’s loan below said amount. According to petitioner, private respondents
were only able to do so in August 1982.
In their comment, private respondents assert that based on
Article 1934 of the Civil Code,[4] a
simple loan is perfected upon the delivery of the object of the contract, hence
a real contract. In this case, even though the loan contract was signed on
Private respondents further maintain that even granting, arguendo,
that the loan contract was perfected on
We agree with private respondents. 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.[5] Petitioner misapplied Bonnevie. The contract in Bonnevie declared by this Court as a perfected consensual contract falls under the first clause of Article 1934, Civil Code. It is an accepted promise to deliver something by way of simple loan.
In Saura Import and Export Co. Inc. vs. Development Bank of
the Philippines, 44 SCRA 445, petitioner applied for a loan of P500,000
with respondent bank. The latter approved the application through a board
resolution. Thereafter, the corresponding mortgage was executed and
registered. However, because of acts
attributable to petitioner, the loan was not released. Later, petitioner
instituted an action for damages. We recognized in this case, a perfected
consensual contract which under normal circumstances could have made the bank
liable for not releasing the loan.
However, since the fault was attributable to petitioner therein, the
court did not award it damages.
A perfected consensual contract, as shown above, 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.[6]
In the present case, the loan contract between BPI, on the one
hand, and ALS and Litonjua, on the other, was perfected only on
We also agree with private respondents that a contract of loan
involves a reciprocal obligation, wherein the obligation or promise of each
party is the consideration for that of the other.[8]
As averred by private respondents, the promise of BPIIC to extend and deliver
the loan is upon the consideration that ALS and Litonjua shall pay the monthly
amortization commencing on
Other points raised by petitioner in connection with the first issue, such as the date of actual release of the loan and whether private respondents were the cause of the delay in the release of the loan, are factual. Since petitioner has not shown that the instant case is one of the exceptions to the basic rule that only questions of law can be raised in a petition for review under Rule 45 of the Rules of Court,[10] factual matters need not tarry us now. On these points we are bound by the findings of the appellate and trial courts.
On the second issue, petitioner claims that it should not be held liable for moral and exemplary damages for it did not act maliciously when it initiated the foreclosure proceedings. It merely exercised its right under the mortgage contract because private respondents were irregular in their monthly amortization. It invoked our ruling in Social Security System vs. Court of Appeals, 120 SCRA 707, where we said:
Nor can the SSS be held liable for moral and temperate damages. As concluded by the Court of Appeals “the negligence of the appellant is not so gross as to warrant moral and temperate damages,” except that, said Court reduced those damages by only P5,000.00 instead of eliminating them. Neither can we agree with the findings of both the Trial Court and respondent Court that the SSS had acted maliciously or in bad faith. The SSS was of the belief that it was acting in the legitimate exercise of its right under the mortgage contract in the face of irregular payments made by private respondents and placed reliance on the automatic acceleration clause in the contract. The filing alone of the foreclosure application should not be a ground for an award of moral damages in the same way that a clearly unfounded civil action is not among the grounds for moral damages.
Private respondents counter that BPIIC was guilty of bad faith and should be liable for said damages because it insisted on the payment of amortization on the loan even before it was released. Further, it did not make the corresponding deduction in the monthly amortization to conform to the actual amount of loan released, and it immediately initiated foreclosure proceedings when private respondents failed to make timely payment.
But as admitted by private respondents themselves, they were
irregular in their payment of monthly amortization. Conformably with our ruling in SSS, we
can not properly declare BPIIC in bad faith. Consequently, we should rule out
the award of moral and exemplary damages.[11]
However, in our view, BPIIC was negligent in relying merely on
the entries found in the deed of mortgage, without checking and correspondingly
adjusting its records on the amount actually released to private respondents
and the date when it was released. Such
negligence resulted in damage to private respondents, for which an award of
nominal damages should be given in recognition of their rights which were
violated by BPIIC.[12]
For this purpose, the amount of P25,000 is sufficient.
Lastly, as in SSS where we awarded attorney’s fees because
private respondents were compelled to litigate, we sustain the award of P50,000
in favor of private respondents as attorney’s fees.
WHEREFORE, the decision dated P50,000 is UPHELD. Additionally, petitioner is
ORDERED to pay private respondents P25,000 as nominal damages. Costs
against petitioner.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.
[1] While Antonio K.
Litonjua was not included in the caption of the petition before this court, apparently,
the intention of petitioner was to include Litonjua as private respondent for
he was a party in all stages of the case both before the Regional Trial Court
and the Court of Appeals and it was clearly indicated in the petition that
“ALS” collectively referred to as ALS Management and Development Corporation
and Antonio K. Litonjua.
[2] RTC Records, p. 278.
[3] Rollo, p. 32.
[4] Art. 1934. An accepted promise to deliver something by
way of commodatum or simple loan is binding upon the parties, but the commodatum
or simple loan itself shall not be perfected until the delivery of the object
of the contract.
[5] Art. 1934, Civil
Code of the Philippines; Monte de Piedad vs. Javier, et al., 36
OG 2176; A. Padilla, Civil Code of the Philippines Annotated, Vol. VI, pp.
474-475 (1987); E. Paras, Civil Code of the Philippines Annotated, Vol. V, p.
885 (1995).
[6] A. Tolentino, Civil
Code of the
[7] Supra, note 3
at 30.
[8] Rose Packing Co.
Inc. vs. Court of Appeals, No. L-33084, 167 SCRA 309, 318-319 (1988).
[9] Art. 1169, Civil Code:
x x x
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. From the
moment one of the parties fulfills his obligation, delay by the other begins.
[10] American President Lines, Ltd. vs. Court
of Appeals, G.R. No. 110853, 336
SCRA 582, 586 (2000).
[11] Art. 2234, Civil
Code: While the amount of the exemplary damages need not be proved, the
plaintiff must show that he is entitled to moral, temperate or compensatory
damages before the court may consider the question of whether or not exemplary
damages should be awarded. In case liquidated damages have been agreed upon,
although no proof of loss is necessary in order that such liquidated damages
may be recovered, nevertheless, before the court may consider the question of
granting exemplary in addition to the liquidated damages, the plaintiff must
show that he would be entitled to moral, temperate or compensatory damages were
it not for the stipulation for liquidated damages.
[12] Art. 2221, Civil
Code: Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.