MANILA METAL CONTAINER CORPORATION VS.

PHILIPPINE NATIONAL BANK

Facts: Petitioner was the owner of 8,015 square meter parcel of land located in
Mandaluyong (now a City), Metro Manila. To secure a Php 900,000.00 loan it had
obtained from respondent philippine National Bank (pNB), petitioner executed a real
estate mortgage over the lot. Respondent PNB later granted petitioner a new credit
accommodation of Php1,000,000.00; and, on November 16, 1973, petitioner
executed an Amendment of Real Estate Mortgage over its property. On March 31,
1981, petitioner secured another loan of Php 653,000.00 from respondent PNB,
payable in quarterly installments of Php 32,650.00, plus interests and other
charges.
On August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of
the real estate mortgage and sought to have the property sold at public auction for
Php 911,532.21, petitioners outstanding obligation to respondent PNB as of June
30, 1982, plus interests and attorneys fees.
After due notice and publication, the property was sold at public auction on
September 28, 1982 where respondent PNB was declared the winning bidder for
Php 100,000.00. The Certificate of Sale issued in its favor was registered and
annotated at the dorsal portion of the title on February 17, 1983. Thus, the period to
redeem the property was to expire on February 17, 1984.
Petitioner sent a letter dated August 25, 1983 to respondent PNB, requesting that it
be granted an extension of time to redeem/repurchase the property. Another letter
was sent reiterating petitioners request for a one-year extension within which to
repurchase the property on instalment. PNB replied that it does not accept partial
payments. Since petitioner failed to redeem the property, a new title was issued in
favour of PNB.
Meanwhile, the Special Assets Management Department (SAMD) had prepared a
statement of account, and as of June 25, 1984 petitioners obligation amounted to
Php1,574,560.47. When apprised of the statement of account, petitioner remitted
Php 725,000.00 to respondent PNB as deposit to repurchase. In a letter dated
November 14, 1984, the PNB management informed petitioner that it was rejecting
the offer and the recommendation of the SAMD. It was suggested that petitioner
purchase the property for Php 2,660,000.00, its minimum market value. Respondent
PNB gave petitioner until December 15, 1984 to act on the proposal; otherwise, its
Php 725,000.00 deposit would be returned and the property would be sold to other
interested buyers.
Petitioner, however, did not agree to respondent PNBs proposal. Instead, it wrote
another letter dated December 12, 1984 requesting for reconsideration. Respondent

PNB replied in a letter dated December 28, 1984, wherein it reiterated its proposal
that petitioner purchase the property for Php 2,660,000.00.
On June 4, 1985, respondent PNB informed petitioner that the PNB Board of
Directors had accepted petitioners offer to purchase the property, but for Php
1,931,389.53 in cash less the Php725,000.00 already deposited with it. The
petitioner did not respond to the said letter. On August 28, 1989, petitioner filed a
complaint against respondent PNB for Annulment of Mortgage and Mortgage
Foreclosure, Delivery of Title, or Specific Performance with Damages.
During pre-trial, the parties agreed to submit the case for decision, based on their
stipulation of facts. While the case was pending, respondent PNB demanded, on
September 20, 1989, that petitioner vacate the property within 15 days from notice,
but petitioners refused to do so.
On March 18, 1993, petitioner offered to repurchase the property for
Php3,500,000.00 and subsequently Php 4,000,000. Both offers were rejected by
PNB since as a matter of their policy they could not sell a property for less than its
market value which is Php 30,000,000.00.
On May 31, 1994, the trial court rendered judgment dismissing the amended
complaint and respondent PNBs counterclaim. It ordered respondent PNB to refund
the Php725,000.00 deposit petitioner had made. The trial court ruled that there was
no perfected contract of sale between the parties; hence, petitioner had no cause of
action for specific performance against respondent. The trial court declared that
respondent had rejected petitioners offer to repurchase the property. Petitioner, in
turn, rejected the terms and conditions contained in the June 4, 1985 letter of the
SAMD. While petitioner had offered to repurchase the property per its letter of July
14, 1988, the amount of Php 643,422.34 was way below the Php 1,206,389.53
which respondent PNB had demanded. It further declared that the Php 725,000.00
remitted by petitioner to respondent PNB on June 4, 1985 was a deposit, and not a
down payment or earnest money.
Meanwhile, on June 17, 1993, petitioners Board of Directors approved Resolution
No. 3-004, where it waived, assigned and transferred its rights over the property in
favor of Bayani Gabriel, one of its Directors.
Thereafter, Bayani Gabriel executed a Deed of Assignment over 51% of the
ownership and management of the property in favor of Reynaldo Tolentino, who
later moved for leave to intervene as plaintiff-appellant. On July 14, 1993, the CA
issued a resolution granting the motion, and likewise granted the motion of
Reynaldo Tolentino substituting petitioner MMCC, as plaintiff-appellant, and his
motion to withdraw as intervenor.

The CA rendered judgment on May 11, 2000 affirming the decision of the RTC. It
declared that petitioner obviously never agreed to the selling price proposed by
respondent PNB (Php1,931,389.53) since petitioner had kept on insisting that the
selling price should be lowered to Php1,574,560.47. Clearly therefore, there was no
meeting of the minds between the parties as to the price or consideration of the
sale.
Petitioner filed a motion for reconsideration, which the CA likewise denied. Thus,
petitioner filed the instant petition for review on certiorari.
Issue: Whether or not petitioner and respondent PNB had entered into a perfected
contract for petitioner to repurchase the property from respondent.
Ruling: The ruling of the appellate court that there was no perfected contract of
sale between the parties on June 4, 1985 is correct. A contract is a meeting of minds
between two persons whereby one binds himself, with respect to the other, to give
something or to render some service. Under Article 1318 of the New Civil Code,
there is no contract unless the following requisites concur: (1) Consent of the
contracting parties; (2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Contracts are perfected by mere consent which is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the
contract. By the contract of sale, one of the contracting parties obligates himself to
transfer the ownership of and deliver a determinate thing, and the other to pay
there for a price certain in money or its equivalent. The absence of any of the
essential elements will negate the existence of a perfected contract of sale.

A contract of sale is consensual in nature and is perfected upon mere meeting of

the minds. When there is merely an offer by one party without acceptance of the
other, there is no contract. When the contract of sale is not perfected, it cannot, as
an independent source of obligation, serve as a binding juridical relation between
the parties.
A negotiation is formally initiated by an offer, which, however, must be certain. At
any time prior to the perfection of the contract, either negotiating party may stop
the negotiation. At this stage, the offer may be withdrawn; the withdrawal is
effective immediately after its manifestation. To convert the offer into a contract,
the acceptance must be absolute and must not qualify the terms of the offer; it
must be plain, unequivocal, unconditional and without variance of any sort from the
proposal.

qualified acceptance or one that involves a new proposal constitutes a

counteroffer and a rejection of the original offer. A counter-offer is considered in

law, a rejection of the original offer and an attempt to end the negotiation between
the parties on a different basis. Consequently, when something is desired which is
not exactly what is proposed in the offer, such acceptance is not sufficient to
guarantee consent because any modification or variation from the terms of the offer
annuls the offer. The acceptance must be identical in all respects with that of the
offer so as to produce consent or meeting of the minds.

We do not agree with petitioners contention that the Php 725,000.00 it had
remitted to respondent was earnest money which could be considered as proof of
the perfection of a contract of sale under Article 1482 of the New Civil Code. Thus,
the Php 725,000.00 was merely a deposit to be applied as part of the purchase
price of the property, in the event that respondent would approve the
recommendation of SAMD for respondent to accept petitioners offer to purchase
the property for Php 1,574,560.47.

In sum, then, there was no perfected contract of sale between petitioner and
respondent over the subject property.