3) Saura Inc vs DBP - Mamugay

Facts: Saura, Inc., applied for an industrial loan to Rehabilitation Finance Corp. (now DBP) in the amount
of P500,000 for the construction of a factory building, for payment of the balance of the jute mill
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 agreement was later on cancelled 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, Saura Inc sued RFC for damages alleging that the failure of RFC to comply to its obligation to
release the loan caused Suara Inc to miss payments on its own contractual commitments it had entered
to.RTC rendered judgment in favor of Saura Inc ruling that thwere was a perfected contract between the
parties and RFC was guilty of breach.

Issue 1: WON the loan contract was perfected

Ruling 1: Yes. There was a perfected consensual contract. Under Article 1934: 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.

Where an application for a loan was approved by resolution of the defendant corporation and the
corresponding mortgage was executed and registered, there arises a perfected consensual contract of
loan. 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.

Issue 2: Is RFC liable for damages for not being able to release the loan proceeds?

Ruling 2: No. RFC imposed two conditions (1: availability of raw materials and 2: increased production)
when it agreed to restore the loan to the original amount of P500,000.00. Saura Inc was in no position to
fulfill such conditions and asked that the mortgage be cancelled. Thus, both parties were in the nature
of mutual desistance which is a mode of extinguishing obligations. 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.