G.R. No. L-24968 April 27, 1972 SAURA IMPORT and !PORT "O., IN"., plaintiff-appellee, vs.

# $ LOPM NT %AN& O' T( P(ILIPPIN S, defendant-appellant. Ponente: MA&ALINTAL, J. Facts: The plaintiff (SAURA) applied to the Rehabilitation Finance Corporation (RFC) for an ind strial loan of P!"",""".(for constr ction of a factor# b ildin$, for pa#%ent of the balance of the p rchase price of the & te %ill %achiner# and e' ip%ent( and as additional )or*in$ capital). RFC approved the loan application for P!"",""", to be sec red b# a first %ort$a$e on the factor# b ildin$ to be constr cted, the land site thereof, and the %achiner# and e' ip%ent to be installed. (Resol tion +o. ,-!) The loan doc %ents )ere e.ec ted. /t appears, ho)ever, in a %eetin$ of the RFC 0oard of 1overnors, it )as decided to red ce the loan fro% P!"","""."" to P2"","""."". Sa ra, /nc. had )ritten RFC re' estin$ that the loan of P!"","""."" be $ranted. The re' est )as denied b# RFC. RFC passed Resol tion +o. 3"42, restorin$ the loan to the ori$inal a%o nt of P!"","""."", b t )ith the follo)in$ proviso: That in vie) of observations %ade of the shorta$e and hi$h cost of i%ported ra) %aterials, the 5epart%ent of A$ric lt re and +at ral Reso rces shall certif# to the follo)in$: ,. That the ra) %aterials needed b# the borro)er-corporation to carr# o t its operation are available in the i%%ediate vicinit#( and 6. That there is prospect of increased prod ction thereof to provide ade' atel# for the re' ire%ents of the factor#. /n a letter to Sa ra, it )as e.plained that it )as re' ired 7as the intention of the ori$inal approval (of the loan) is to develop the %an fact re of sac*s on the basis of locall# available ra) %aterials.7 The cover pa$e of its broch re (8.h. 9) describes the pro&ect as a 7:oint vent re b# and bet)een the 9indanao /nd str# Corporation and the Sa ra /%port and 8.port Co., /nc. to finance, %ana$e and operate a Kenaf %ill plant, to %an fact re copra and corn ba$s, r nners, floor %attin$s, carpets, draperies( o t of ,""; local ra) %aterials, principal kenaf.7 Several #ears after approval, Sa ra re' ested RFC to cancel the %ort$a$e. Al%ost 3 #ears after the %ort$a$e in favor of RFC )as cancelled at the re' est of Sa ra, /nc., the latter co%%enced the present s it for da%a$es, alle$in$ fail re of RFC (as predecessor of the defendant 50P) to co%pl# )ith its obli$ation to release the proceeds of the loan applied for and approved, thereb# preventin$ the plaintiff fro% co%pletin$ or pa#in$ contract al co%%it%ents it had entered into, in connection )ith its & te %ill pro&ect. TC: Rendered & d$%ent for the plaintiff, r lin$ that there )as a perfected contract bet)een the parties and that the defendant )as $ ilt# of breach thereof. /ss e: <=+ there )as no perfected contract> ?8S

@8A5: ?es. There )as a perfected contract. <e hold that there )as indeed a perfected consens al contract, as reco$niBed in Article ,32- of the Civil Code, )hich provides: ART. ,3!-. An accepted pro%ise to deliver so%ethin$, b# )a# of co%%odat % or si%ple loan is bindin$ pon the parties, b t the co%%odat % or si%ple loan itself shall not be perferted ntil the deliver# of the ob&ect of the contract. There )as ndo btedl# offer and acceptance in this case: the application of Sa ra, /nc. for a loan of P!"","""."" )as approved b# resol tion of the defendant, and the correspondin$ %ort$a$e )as e.ec ted and re$istered, there arises a perfected consens al contract. /t sho ld be noted that RFC entertained the loan application of Sa ra, /nc. on the ass %ption that the factor# to be constr cted )o ld tiliBe locall# $ro)n ra) %aterials, principall# kenaf. /t )as in line )ith s ch ass %ption that )hen RFC restored the loan to the ori$inal a%o nt of P!"","""."". The i%position of those conditions )as b# no %eans a deviation fro% the ter%s of the a$ree%ent, b t rather a step in its i%ple%entation. 8videntl# Sa ra, /nc. realiBed that it co ld not %eet the conditions re' ired b# RFC, and so )rote its letter statin$ that local & te 7)ill not be able in s fficient ' antit# this #ear or probabl# ne.t #ear,7 and as*in$ that o t of the loan be released 7for ra) %aterials and labor.7 <hen RFC t rned this do)n, Sa ra, /nc. obvio sl# )as in no position to co%pl# )ith RFCCs conditions. So instead of doin$ so and insistin$ that the loan be released as a$reed pon, Sa ra, /nc. as*ed that the %ort$a$e be cancelled. The action th s ta*en b# both parties )as in the nat re of % t al desistance D )hich is a %ode of e.tin$ ishin$ obli$ations. The s bse' ent cond ct of Sa ra, /nc. confir%s this desistance. /t did not protest a$ainst an# alle$ed breach of contract b# RFC, or even point o t that the latterCs stand )as le$all# n& stified. /ts re' est for cancellation of the %ort$a$e carried no reservation of )hatever ri$hts it believed it %i$ht have a$ainst RFC for the latterCs non-co%pliance. /t )as onl# in ,3E-, nine #ears after the loan a$ree%ent had been cancelled at its o)n re' est, that Sa ra, /nc. bro $ht this action for da%a$es.All these circ %stances de%onstrate be#ond do bt that the said a$ree%ent had been e.tin$ ished b# % t al desistance D and that on the initiative of the plaintiff-appellee itself.