Manila Metal Container Corporation vs Philippine National

Bank [GR No. 166862, December 20, 2006]

FACTS:
Petitioner was the owner of 8,015 square meters of parcel of land located
in Mandaluyong City, Metro Manila. To secure a P900,000.00 loan it had obtained
from respondent Philippine National Bank, petitioner executed a real estate
mortgage over the lot. Respondent PNB later granted petitioner a new credit
accommodation. 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. After due notice and publication, the property was
sold at public action where respondent PNB was declared the winning bidder.
Petitioner sent a letter to PNB, requesting it to be granted an extension of
time to redeem/repurchase the property. Some PNB personnel informed that as a
matter of policy, the bank does not accept “partial redemption”. Since petitioner failed to
redeem the property, the Register of Deeds cancelled TCT No. 32098 and
issued a new title in favor of PNB.
Meanwhile, the Special Asset Management Department (SAMD) had prepared
a statement of account of petitioner’s obligation. It also recommended the management
of PNB to allow petitioner to repurchase the property for P1,574,560.oo. PNB
rejected the offer and recommendation of SAMD. It instead suggested to
petitioner to purchase the property for P2,660,000.00, in its minimum market
value. Petitioner declared that it had already agreed to SAMD’s offer to
purchase for P1,574,560.47 and deposited a P725,000.00.

ISSUE:
Whether or not petitioner and respondent PNB had entered into a perfected contract for
petitioner to repurchase the property for respondent.

RULING: NO
The SC affirmed the ruling of the appellate court that there was no perfected contact of sale
between the parties.
A contract is meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service. Under 1818 of the Civil Code,
there is no contract unless the following requisites concur:
1. Consent of the contracting parties;
2. Objection certain which is the subject matter of the contract;
3. Cause of the obligation which is established.
Contract is perfected by mere consent which is manifested by the meeting
of the offer and the acceptance upon the thing and causes which are to
constitute the contract. Once perfected, the bind between other contracting parties and the
obligations arising therefrom have the form of law between the parties and should be complied in
good faith. The absence of any essential element will negate the existence of a
perfected contract of sale.

 ART. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as
part of the price and as proof of the perfection of the contract

 The deposit of P725,000 was accepted by PNB on the condition that the
purchase price is still subject to the approval of the PNB Board

 Absent proof of the concurrence of all the essential elements of a contract

of sale, the giving of earnest money cannot establish the existence of a
perfected contract of sale.

The court ruled in Boston Bank of the Philippines vs Manalo:

“A definite agreement as to the price is an essential element of a binding agreement to sell
personal or real property because it seriously affects the rights and obligations of the parties.
Price is an essential element in the formation of a binding and enforceable contract of sale. The
fixing of the price can never be left to the decision of one of the contracting parties. But a price
fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.”
In the case at bar, the parties to the contract is between Manila Metal Container Corporation
and Philippine National Bank and not to Special Asset Management Department. Since the price
offered by PNB was not accepted, there is no contract. Hence it cannot serve as a binding
juridical relation between the parties.