The 25-year-old made his Spain debut against Serbia earlier this year.
Garcia joined Benfica from Spanish giants Real Madrid in 2009.
Garcia will replace Nigel de Jong, who left City for AC Milan earlier on Friday.
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Since Guus Hiddink arrived at the helm, Chelsea have improved considerably after a tricky start to the campaign.
Newcastle United are staring down the barrel of relegation to the Championship for the second time in the past eight years.