CREDIT TRANSACTIONS

BINDING EFFECT OF ACCEPTED PROMISE TO LEND

It does not mean that a promise to lend would be without ef cacy and judicial value. An
accepted promise to make a future loan is a consensual contract and, therefore, binding upon
the parties but it is only after delivery, will the real contract of loan arise.

SAURA IMPORT AND EXPORT CO., INC. VS. DEVELOPMENT BANK OF THE PHILS.,
44 SCRA 445 [1972] : Application for loan approved by corporation. Where an
application for a loan of money was approved by resolution of the corporation (lender) and
the corresponding mortgage was executed and registered, there arises a perfected
consensual contract of loan. While a perfect contract of loan can give rise to an action for
damages, said contract does not constitute the real contract of loan.

BONNEVIE VS. COURT OF APPEALS, 125 SCRA 122 [1983] : Mortgage executed by
virtue of loan granted. Where the mortgage deed was executed for and on condition of
the loan granted to the mortgagors, the fact that the latter did not collect from the
mortgagee bank the consideration of the mortgage on the date it was executed but six (6)
days later when the mortgagors and their co-maker signed the promissory note is
immaterial. A contract of loan being consensual, it was perfected at the same time that
the contract of mortgage was executed, the promissory note being only an evidence of an
indebtedness and did not indicate lack of consideration of the mortgage at the time of its
execution

CENTRAL BANK OF THE PHILS. VS. COURT OF APPEALS, 139 SCRA 46 [1985] :
Only partial amount released under a loan agreement secured by mortgage. Where a
bank and a borrower undertook reciprocal obligations by entering an P80,000.00 loan
agreement on April 28, 1965 when the borrower executed a real estate mortgage, but the
bank was able to release only P17,000.00, the bank was held in default for P63,000.00 to
the borrower.

In reciprocal obligations, the obligation or promise of each party is the consideration for that of
the other, and when one party has performed or is ready and willing to perform his part of the
contract, the other party who has not performed or is not ready and willing to perform incurs
in delay. (see Art. 1169.) Here, the promise of the borrower to pay, and he signied his
willingness to pay when he executed the real estate mortgage, was the consideration for the
obligation of the bank to furnish the P80,000.00 loan. And the mere fact of insolvency of a
debtor (bank) is never an excuse for the non-fulllment of an obligation but instead it is taken
as a breach of the contract by him.