Case Digest (G.R. No. L-24968)
Facts:
Saura Import & Export Co., Inc. v. Development Bank of the Philippines, G.R. No. L-24968. April 27, 1972, the Supreme Court En Banc, Makalintal, J., writing for the Court.In July 1953 Saura Import & Export Co., Inc. (Saura, Inc.) applied to the Rehabilitation Finance Corporation (RFC), predecessor of Development Bank of the Philippines (DBP), for an industrial loan of P500,000 to build a factory for manufacture of jute sacks, pay the balance of machinery purchased, and provide working capital. RFC approved the loan by Resolution No. 145 on January 7, 1954, specifying the earmarked uses and requiring co-signers and releases to be made as construction progressed. Saura, Inc. executed the promissory note and a deed of mortgage, which was registered on April 17, 1954.
RFC later ordered a reexamination (Resolution No. 736) and on June 10, 1954 reduced the loan to P300,000 (Resolution No. 3989), allowing releases up to P100,000 to place the factory in operation. China Engineers, Ltd., a proposed co-signer, withdrew in June–July 1954; RFC treated the loan as cancelled. Saura, Inc. protested and RFC restored the P500,000 approval by Resolution No. 9083 on December 17, 1954, but imposed a proviso that the Department of Agriculture and Natural Resources must certify (1) availability of local raw materials in the immediate vicinity and (2) prospect of increased production to meet factory requirements. RFC explained that the original approval aimed to develop sack manufacture on locally available raw materials (chiefly kenaf).
Saura, Inc. acknowledged studies indicating local kenaf shortages, and on January 21, 1955 requested releases that would include funds for imported raw jute and other deviations from the purposes in RFC Resolution No. 145. RFC replied on January 25, 1955 reiterating its insistence on local raw-materials basis and declined the requested diversion. Negotiations then stalled. Instead of insisting on performance, Saura, Inc. requested cancellation of the mortgage; RFC executed a deed of cancellation on June 17, 1955. Saura, Inc. made no reservation of rights when it took the cancellation; later events included a suit by Prudential Bank (May 15, 1955) and a separate loan application to DBP in 1962.
On January 9, 1964 Saura, Inc. sued RFC/DBP for damages for alleged failure to release loan proceeds; the Court of First Instance of M...(Subscriber-Only)
Issues:
- Did Saura, Inc.’s cause of action prescribe, or was it waived or abandoned?
- Was there a perfected and enforceable loan contract between RFC/DBP and Saura, Inc.?
- Did RFC/DBP breach any obligation to release the loan proceeds, entitling Saura...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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