Saura Inc. Vs DBP 44 Scra 445

G.R. No.
L-24968 April 27, 1972

SAURA IMPORT and EXPORT CO., INC., plaintiff-appellee,
vs.
DEVELOPMENT BANK OF THE PHILIPPINES, defendant-appellant.
FACTS:
In July 1953, plaintiff Saura Inc. applied to 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 as additional working capital. However, the jute mill machinery had
already been purchased by Saura on the strength of a letter of credit extended by the Prudential Bank
and Trust Co., and to secure its release without first paying the draft, Saura, Inc. executed a trust receipt
in favor of the said bank.
On January 7, 1954, DBP approved 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. Among its conditions is that Mr. & Mrs. Ramon E. Saura, Inocencia Arellano,
Aniceto Caolboy and Gregoria Estabillo and China Engineers, Ltd. shall sign the promissory notes jointly
with the borrower-corporation. Saura, Inc. was officially notified of the approval on January 9, 1954. The
day before, however, Saura, Inc. wrote a letter to RFC, requesting a modification of the terms laid down
by it, that in lieu of having China Engineers, Ltd. sign as co-maker, Saura Inc. would put up a bond for
P123, 500.00, and that Maria S. Roca would be substituted for Inocencia. DBP approved the request on
February 4, 1954.
However, Saura, Inc. once again wrote to DBP that China Engineers, Ltd. had again agreed to
act as co-signer for the loan, and asked that the necessary documents be prepared. On April 13, 1954 the
loan documents were executed. Nonetheless, in a meeting of the DBP Board of Governors, it was
decided to reduce the loan from P500, 000.00 to P300, 000.00. But, sometime in June 1954, China
Engineers Ltd. declared that the company is no longer part of the loan and therefore considered the same
as cancelled as far as it was concerned. They requested that the mortgage be withdrawn.
Because of that, Saura, Inc. had written DBP requesting that the loan of P500,000.00 be granted
instead of the agreed reduced amount. This, however, was denied by DBP. But then again, Saura Inc.
informed DBP that China Engineers Ltd. changed its declaration and is now willing to sign the promissory
notes as co-maker. DBP then restored the loan to the original amount.
However, negotiations came to a standstill. Saura, Inc. did not pursue the matter further. Instead,
it requested DBP to cancel the mortgage, and so, on June 17, 1955 DBP executed the corresponding
deed of cancellation and delivered it to Saura, Inc.
Almost 9 years after the mortgage in favor of DBP was cancelled at the request of Saura, Inc., the
latter commenced the present suit for damages, alleging failure of DBP to comply with its obligation to
release the proceeds of the loan applied for and approved, thereby preventing the plaintiff from
completing or paying contractual commitments it had entered into.
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. The present appeal is from that
judgment.
ISSUE: WON there was a perfected consensual contract.
HELD:
Yes. Article 1934 of the Civil Code 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 perferted until the delivery of the object of the contract. There was undoubtedly offer and
acceptance in this case evidenced by the application of Saura, Inc. for a loan and the subsequent
approval of DBP, and the corresponding execution and registration of mortgage. When DBP turned down
the request of petitioner, Saura, Inc. obviously 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. asked that the
mortgage be cancelled. The action thus taken by both parties was in the nature of mutual desistance. It is
a concept that derives from the principle that since mutual agreement can create a contract, mutual
disagreement by the parties can cause its extinguishment.
WHEREFORE, the judgment appealed from is reversed and the complaint dismissed.

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G.R. No.

L-24968 April 27, 1972

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