Saura Import and Export Co. vs.

DBP, 44 SCRA 445

FACTS: In July 1953 the plaintiff, Saura applied to the Rehabilitation Finance Corporation (RFC), before
its conversion into DBP, for an industrial loan of P500,000.00, to be used for the construction of a
factory building, to pay the balance of the purchase price of the jute mill machinery and equipment; and
for additional working capital.

RFC passed Resolution No. 145 approving the loan application for P500,000.00, to be secured by a first
mortgage on the factory building to be constructed, the land site thereof, and the machinery and
equipment to be installed.

Negotiations were made but Saura, Inc. was in no position to comply with RFC's conditions. So instead of
doing so and insisting that the loan be released as agreed upon, Saura, Inc. requested RFC to cancel the
mortgage, and so, RFC executed the corresponding deed of cancellation and delivered it to Ramon F.
Saura himself as president of Saura, Inc.

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. 

Nine years after the mortgage was cancelled, Saura sued RFC alleging failure to comply with its
obligations to release the loan proceeds, thereby prevented it from paying the obligation to Prudential
Bank. 

The defendant pleaded that there was no perfected contract; and that assuming there was, the plaintiff
itself did not comply with the terms thereof.

The trial court rendered judgment for the plaintiff, ruling that there was a perfected contract between
the parties and that the defendant was guilty of breach thereof.

ISSUE: Whether there was a perfected contract between the parties.

RULING: It is held that there was indeed a perfected consensual contract, as recognized in Article 1934
of the Civil Code, which provides:

ART. 1954. 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.

There was undoubtedly offer and acceptance in this case: the application of Saura, Inc. for a loan of
P500,000.00 was approved by resolution of the defendant, and the corresponding mortgage was
executed and registered. But this fact alone falls short of resolving the basic claim that the defendant
failed to fulfill its obligation and the plaintiff is therefore entitled to recover damages.