Spouses Castillo v. Santos & PNB

 

Spouses Castillo v. Santos & PNB

G.R. No. 198776

July 20, 2022

 

FACTS:

Petitioners filed a complaint for breach of contract and damages against PNB and its branch officers, one of them being Santos. Petitioners were engaged in the poultry business and were valued clients of PNB for six years before they transferred their account to RCBC. Petitioners alleged in their complaint that during the meeting at their residence with Santos, they were offered a loan package of PHP 5,000,000.00 however, only PHP 2,900,000.00 was released. Petitioners claimed they demanded for the remaining balance but were refused. Respondents clarified that while petitioners did indeed apply for the loan package, this is not automatically granted and released without first seeing an appraisal report on petitioners’ collateral as well as a study and review of their business. Respondents alleged that the collateral put up by petitioners was insufficient to justify the grant and release of the full amount of PHP 5,000,000.00. The RTC ruled in favor of petitioners. On appeal with the CA, they reversed and set aside the RTC decision.

ISSUE:

Whether or not the CA was correct in dismissing the case against PNB and respondents.

HELD:

YES. A simple loan or mutuum is a contract where one of the parties delivers to another, either money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid. A loan contract is not a consensual contract but a real contract, and it shall not be perfected until the delivery of the object of the contract. Necessarily, the delivery of the proceeds of the loan by the lender to the borrower is indispensable to perfect the contract of loan. As correctly concluded by the CA, the amount applied for in a loan is not necessarily the amount that the bank is obligated to grant and release, since the same is still subject to the bank’s review and approval process taking into consideration an applicant’s creditworthiness and sufficiency of the collateral. In the instant case, PNB released and delivered only the amount of PHP 2,900,000.00 considering that the collateral put up by petitioners was not sufficient to cover the amount of PHP 5,000,000.00. Consequently, upon the release and delivery of the loan proceeds, the loan contract was perfected. The loan contract having been perfected; petitioners could not demand from PNB the release of the remaining balance of the loan applied for. Once the proceeds have been delivered, the unilateral characteristic of the contract arises, and the borrower is bound to pay the lender an amount equal to that received.