Saura Import & Export Co., Inc.

Vs DBP

FACTS
Saura applied to the Rehabilitation Finance Corporation (RFC), before its conversion into DBP, for an
industrial loan to be used for construction of factory building, for payment of the balance of the purchase
price of the jute machinery and equipment and as additional working capital. In Resolution No.145, the
loan application was approved to be secured first by mortgage on the factory buildings, the land site, and
machinery and equipment to be installed.

The mortgage was registered and documents for the promissory note were executed. The cancellation of
the mortgage was requested to make way for the registration of a mortgage contract over the same
property in favor of Prudential Bank and Trust Co., the latter having issued Saura letter of credit for the
release of the jute machinery. As security, Saura execute a trust receipt in favor of the Prudential. For
failure of Saura to pay said obligation, Prudential sued Saura.

After 9 years after the mortgage was cancelled, Saura sued RFc alleging failure to comply with tits
obligations to release the loan proceeds, thereby prevented it from paying the obligation to Prudential
Bank.

The trial court ruled in favor of Saura, ruling that there was a perfected contract between the parties ad
that the RFC was guilty of breach thereof.

ISSUE
Whether or not there was a perfected contract between the parties.

HELD
The Court held in the affirmative. Article 1934 provides: 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 delivery of the object of the contract.

There was undoubtedly offer and acceptance in the case. When an application for a loan of money was
approved by resolution of the respondent corporation and the responding mortgage was executed and
registered, there arises a perfected consensual contract.