Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No.

166862 December 20, 2006

MANILA METAL CONTAINER CORPORATION, petitioner, REYNALDO C. TOLENTINO, intervenor, vs. PHILIPPINE NATIONAL AN!, respondent, DMCI"PRO#ECT DE$ELOPERS, INC., intervenor.

!ISION

CALLE#O, SR., J.% "efore us is a petition for revie# on certiorari of the Decision$ of the !ourt of %ppeals &!%' in !%( ).R. No. *+$,- #hich affir.ed the decision/ of the Re0ional Trial !ourt &RT!', "ranch 1$, Pasi0 !it2, in !ivil !ase No. ,3,,$, and its Resolution- den2in0 the .otion for reconsideration filed b2 petitioner Manila Metal !ontainer !orporation &MM!!'. T&e A'(ece)e'(* Petitioner #as the o#ner of a 3,4$, s5uare .eter parcel of land located in Mandalu2on0 &no# a !it2', Metro Manila. The propert2 #as covered b2 Transfer !ertificate of Title &T!T' No. --/463 of the Re0istr2 of Deeds of Ri7al. To secure a P644,444.44 loan it had obtained fro. respondent Philippine National "an8 &PN"', petitioner e9ecuted a real estate .ort0a0e over the lot. Respondent PN" later 0ranted petitioner a ne# credit acco..odation of P$,444,444.44: and, on Nove.ber $+, $61-, petitioner e9ecuted an %.end.ent* of Real state Mort0a0e over its propert2. On March -$, $63$, petitioner secured another loan of P+,-,444.44 fro. respondent PN", pa2able in 5uarterl2 install.ents of P-/,+,4.44, plus interests and other char0es., On %u0ust ,, $63/, respondent PN" filed a petition for e9tra;udicial foreclosure of the real estate .ort0a0e and sou0ht to have the propert2 sold at public auction for P6$$,,-/./$, petitioner<s outstandin0 obli0ation to respondent PN" as of =une -4, $63/, + plus interests and attorne2<s fees. %fter due notice and publication, the propert2 #as sold at public auction on Septe.ber /3, $63/ #here respondent PN" #as declared the #innin0 bidder for P$,444,444.44. The !ertificate of Sale1 issued in its favor #as re0istered #ith the Office of the Re0ister of Deeds of Ri7al, and #as annotated at the dorsal portion of the title on Februar2 $1, $63-. Thus, the period to redee. the propert2 #as to e9pire on Februar2 $1, $63*.

Petitioner sent a letter dated %u0ust /,, $63- to respondent PN", re5uestin0 that it be 0ranted an e9tension of ti.e to redee.>repurchase the propert2. 3 In its repl2 dated %u0ust -4, $63-, respondent PN" infor.ed petitioner that the re5uest had been referred to its Pasa2 !it2 "ranch for appropriate action and reco..endation.6 In a letter$4 dated Februar2 $4, $63*, petitioner reiterated its re5uest for a one 2ear e9tension fro. Februar2 $1, $63* #ithin #hich to redee.>repurchase the propert2 on install.ent basis. It reiterated its re5uest to repurchase the propert2 on install.ent. $$ Mean#hile, so.e PN" Pasa2 !it2 "ranch personnel infor.ed petitioner that as a .atter of polic2, the ban8 does not accept ?partial rede.ption.?$/ Since petitioner failed to redee. the propert2, the Re0ister of Deeds cancelled T!T No. -/463 on =une $, $63*, and issued a ne# title in favor of respondent PN".$- Petitioner<s offers had not 2et been acted upon b2 respondent PN". Mean#hile, the Special %ssets Mana0e.ent Depart.ent &S%MD' had prepared a state.ent of account, and as of =une /,, $63* petitioner<s obli0ation a.ounted to P$,,1*,,+4.*1. This included the bid price of P$,4,+,6/*.,4, interest, advances of insurance pre.iu.s, advances on realt2 ta9es, re0istration e9penses, .iscellaneous e9penses and publication cost.$* @hen apprised of the state.ent of account, petitioner re.itted P1/,,444.44 to respondent PN" as ?deposit to repurchase,? and Official Receipt No. 613$6$ #as issued to it.$, In the .eanti.e, the S%MD reco..ended to the .ana0e.ent of respondent PN" that petitioner be allo#ed to repurchase the propert2 for P$,,1*,,+4.44. In a letter dated Nove.ber $*, $63*, the PN" .ana0e.ent infor.ed petitioner that it #as re;ectin0 the offer and the reco..endation of the S%MD. It #as su00ested that petitioner purchase the propert2 for P/,++4,444.44, its .ini.u. .ar8et value. Respondent PN" 0ave petitioner until Dece.ber $,, $63* to act on the proposal: other#ise, its P1/,,444.44 deposit #ould be returned and the propert2 #ould be sold to other interested bu2ers.$+ Petitioner, ho#ever, did not a0ree to respondent PN"<s proposal. Instead, it #rote another letter dated Dece.ber $/, $63* re5uestin0 for a reconsideration. Respondent PN" replied in a letter dated Dece.ber /3, $63*, #herein it reiterated its proposal that petitioner purchase the propert2 for P/,++4,444.44. PN" a0ain infor.ed petitioner that it #ould return the deposit should petitioner desire to #ithdra# its offer to purchase the propert2. $1 On Februar2 /,, $63,, petitioner, throu0h counsel, re5uested that PN" reconsider its letter dated Dece.ber /3, $63*. Petitioner declared that it had alread2 a0reed to the S%MD<s offer to purchase the propert2 forP$,,1*,,+4.*1, and that #as #h2 it had paid P1/,,444.44. Petitioner #arned respondent PN" that it #ould see8 ;udicial recourse should PN" insist on the position. $3 On =une *, $63,, respondent PN" infor.ed petitioner that the PN" "oard of Directors had accepted petitioner<s offer to purchase the propert2, but for P$,6-$,-36.,- in cash less the P1/,,444.44 alread2 deposited #ith it.$6 On pa0e t#o of the letter #as a space above the t2pe#ritten na.e of petitioner<s President, Pablo )abriel, #here he #as to affi9 his si0nature. Ao#ever, Pablo )abriel did not confor. to the letter but .erel2 indicated therein that he had received it. /4 Petitioner did not respond, so PN" re5uested petitioner in a letter dated =une -4, $633 to sub.it an a.ended offer to repurchase.

Petitioner re;ected respondent<s proposal in a letter dated =ul2 $*, $633. It .aintained that respondent PN" had a0reed to sell the propert2 for P$,,1*,,+4.*1, and that since its P1/,,444.44 do#npa2.ent had been accepted, respondent PN" #as proscribed fro. increasin0 the purchase price of the propert2./$ Petitioner averred that it had a net balance pa2able in the a.ount of P+*-,*,/.-*. Respondent PN", ho#ever, re;ected petitioner<s offer to pa2 the balance of P+*-,*,/.-* in a letter dated %u0ust $, $636.// On %u0ust /3, $636, petitioner filed a co.plaint a0ainst respondent PN" for ?%nnul.ent of Mort0a0e and Mort0a0e Foreclosure, Deliver2 of Title, or Specific Perfor.ance #ith Da.a0es.? To support its cause of action for specific perfor.ance, it alle0ed the follo#in0B -*. %s earl2 as =une /,, $63*, PN" had accepted the do#n pa2.ent fro. Manila Metal in the substantial a.ount of P1/,,444.44 for the rede.ption>repurchase price of P$,,1*,,+4.*1 as approved b2 its SM%D and considerin0 the reliance .ade b2 Manila Metal and the lon0 ti.e that has elapsed, the approval of the hi0her .ana0e.ent of the "an8 to confir. the a0ree.ent of its SM%D is clearl2 a potestative condition #hich cannot le0all2 pre;udice Manila Metal #hich has acted and relied on the approval of SM%D. The "an8 cannot ta8e advanta0e of a condition #hich is entirel2 dependent upon its o#n #ill after acceptin0 and benefitin0 fro. the substantial pa2.ent .ade b2 Manila Metal. -,. PN" approved the repurchase price of P$,,1*,,+4.*1 for #hich it accepted P1/,,444.44 fro. Manila Metal. PN" cannot ta8e advanta0e of its o#n dela2 and lon0 inaction in de.andin0 a hi0her a.ount based on unilateral co.putation of interest rate #ithout the consent of Manila Metal. Petitioner later filed an a.ended co.plaint and supported its clai. for da.a0es #ith the follo#in0 ar0u.entsB -+. That in order to protect itself a0ainst the #ron0ful and .alicious acts of the defendant "an8, plaintiff is constrained to en0a0e the services of counsel at an a0reed fee of P,4,444.44 and to incur liti0ation e9penses of at least P-4,444.44, #hich the defendant PN" should be conde.ned to pa2 the plaintiff Manila Metal. -1. That b2 reason of the #ron0ful and .alicious actuations of defendant PN", plaintiff Manila Metal suffered bes.irched reputation for #hich defendant PN" is liable for .oral da.a0es of at least P,4,444.44. -3. That for the #ron0ful and .alicious act of defendant PN" #hich are hi0hl2 reprehensible, e9e.plar2 da.a0es should be a#arded in favor of the plaintiff b2 #a2 of e9a.ple or correction for the public 0ood of at least P-4,444.44./Petitioner pra2ed that, after due proceedin0s, ;ud0.ent be rendered in its favor, thusB a' Declarin0 the %.ended Real state Mort0a0e &%nne9 ?%?' null and void and #ithout an2 le0al force and effect. b' Declarin0 defendant<s acts of e9tra(;udiciall2 foreclosin0 the .ort0a0e over plaintiff<s propert2 and settin0 it for auction sale null and void.

c' Orderin0 the defendant Re0ister of Deeds to cancel the ne# title issued in the na.e of PN" &T!T NO. *-16/' coverin0 the propert2 described in para0raph * of the !o.plaint, to reinstate T!T No. -14/, in the na.e of Manila Metal and to cancel the annotation of the .ort0a0e in 5uestion at the bac8 of the T!T No.-14/, described in para0raph * of this !o.plaint. d' Orderin0 the defendant PN" to return and>or deliver ph2sical possession of the T!T No. -14/,described in para0raph * of this !o.plaint to the plaintiff Manila Metal. e' Orderin0 the defendant PN" to pa2 the plaintiff Manila Metal<s actual da.a0es, .oral and e9e.plar2 da.a0es in the a00re0ate a.ount of not less than P34,444.44 as .a2 be #arranted b2 the evidence and fi9ed b2 this Aonorable !ourt in the e9ercise of its sound discretion, and attorne2<s fees of P,4,444.44 and liti0ation e9penses of at least P-4,444.44 as .a2 be proved durin0 the trial, and costs of suit. Plaintiff li8e#ise pra2s for such further reliefs #hich .a2 be dee.ed ;ust and e5uitable in the pre.ises./* In its %ns#er to the co.plaint, respondent PN" averred, as a special and affir.ative defense, that it had ac5uired o#nership over the propert2 after the period to redee. had elapsed. It clai.ed that no contract of sale #as perfected bet#een it and petitioner after the period to redee. the propert2 had e9pired. Durin0 pre(trial, the parties a0reed to sub.it the case for decision, based on their stipulation of facts./, The parties a0reed to li.it the issues to the follo#in0B $. @hether or not the =une *, $63, letter of the defendant approvin0>acceptin0 plaintiff<s offer to purchase the propert2 is still valid and le0all2 enforceable. /. @hether or not the plaintiff has #aived its ri0ht to purchase the propert2 #hen it failed to confor. #ith the conditions set forth b2 the defendant in its letter dated =une *, $63,. -. @hether or not there is a perfected contract of sale bet#een the parties. /+ @hile the case #as pendin0, respondent PN" de.anded, on Septe.ber /4, $636, that petitioner vacate the propert2 #ithin $, da2s fro. notice, /1 but petitioners refused to do so. On March $3, $66-, petitioner offered to repurchase the propert2 for P-,,44,444.44./3 The offer #as ho#ever re;ected b2 respondent PN", in a letter dated %pril $-, $66-. %ccordin0 to it, the prevailin0 .ar8et value of the propert2 #as appro9i.atel2 P-4,444,444.44, and as a .atter of polic2, it could not sell the propert2 for less than its .ar8et value. /6 On =une /$, $66-, petitioner offered to purchase the propert2 for P*,/,4,444.44 in cash.-4The offer #as a0ain re;ected b2 respondent PN" on Septe.ber $-, $66-.-$ On Ma2 -$, $66*, the trial court rendered ;ud0.ent dis.issin0 the a.ended co.plaint and respondent PN"<s counterclai.. It ordered respondent PN" to refund the P1/,,444.44 deposit petitioner had .ade.-/ The trial court ruled that there #as no perfected contract of sale bet#een the parties: hence, petitioner had no cause of action for specific perfor.ance a0ainst respondent. The trial court declared that respondent had re;ected petitioner<s offer to repurchase the propert2.

Petitioner, in turn, re;ected the ter.s and conditions contained in the =une *, $63, letter of the S%MD. @hile petitioner had offered to repurchase the propert2 per its letter of =ul2 $*, $633, the a.ount of P+*-,*//.-* #as #a2 belo# the P$,/4+,-36.,- #hich respondent PN" had de.anded. It further declared that the P1/,,444.44 re.itted b2 petitioner to respondent PN" on =une *, $63, #as a ?deposit,? and not a do#npa2.ent or earnest .one2. On appeal to the !%, petitioner .ade the follo#in0 alle0ationsB I TA CO@ R !ODRT RR D IN RDCIN) TA%T D F ND%NT(%PP CC <S C TT R D%T D * =DN $63, %PPROVIN)>%!! PTIN) PC%INTIFF(%PP CC%NT<S OFF R TO PDR!A%S TA SD"= !T PROP RTE IS NOT V%CID %ND NFOR! %"C . II TA CO@ R !ODRT RR D IN RDCIN) TA%T TA R @%S NO P RF !T D !ONTR%!T OF S%C " T@ N PC%INTIFF(%PP CC%NT %ND D F ND%NT( %PP CC . III TA CO@ R !ODRT RR D IN RDCIN) TA%T PC%INTIFF(%PP CCC%NT @%IV D ITS RI)AT TO PDR!A%S TA SD"= !T PROP RTE @A N IT F%IC D TO !ONFORM @ITA !ONDITIONS S T FORTA "E D F ND%NT(%PP CC IN ITS C TT R D%T D * =DN $63,. IV TA CO@ R !ODRT RR D IN DISR )%RDIN) TA F%!T TA%T IT @%S TA D F ND%NT(%PP CC @AI!A R ND R D IT DIFFI!DCT IF NOT IMPOSSI"C FOR PC%INTIFF(%PP CC%NT TO !OMPC T TA "%C%N! OF TA IR PDR!A%S PRI! . V TA CO@ R !ODRT RR D IN DISR )%RDIN) TA F%!T TA%T TA R @%S NO V%CID R S!ISSION OR !%N! CC%TION OF SD"= !T !ONTR%!T OF R PDR!A%S . VI TA CO@ R !ODRT RR D IN D !C%RIN) TA%T PC%INTIFF F%IC D %ND R FDS D TO SD"MIT TA %M ND D R PDR!A%S OFF R. VII TA CO@ R !ODRT RR D IN DISMISSIN) TA %M ND D !OMPC%INT OF PC%INTIFF(%PP CC%NT. VIII

TA CO@ R !ODRT RR D IN NOT %@%RDIN) PC%INTIFF(%PP CC%NT %!TD%C, MOR%C %ND F MPC%RE D%M%) S, %TTOTRN E<S F S %ND CITI)%TION FP NS S.-Mean#hile, on =une $1, $66-, petitioner<s "oard of Directors approved Resolution No. -(44*, #here it #aived, assi0ned and transferred its ri0hts over the propert2 covered b2 T!T No. --466 and T!T No. -14/, in favor of "a2ani )abriel, one of its Directors.-* Thereafter, "a2ani )abriel e9ecuted a Deed of %ssi0n.ent over ,$G of the o#nership and .ana0e.ent of the propert2 in favor of Re2naldo Tolentino, #ho later .oved for leave to intervene as plaintiff(appellant. On =ul2 $*, $66-, the !% issued a resolution 0rantin0 the .otion, -, and li8e#ise 0ranted the .otion of Re2naldo Tolentino substitutin0 petitioner MM!!, as plaintiff(appellant, and his .otion to #ithdra# as intervenor.-+ The !% rendered ;ud0.ent on Ma2 $$, /444 affir.in0 the decision of the RT!. -1 It declared that petitioner obviousl2 never a0reed to the sellin0 price proposed b2 respondent PN" &P$,6-$,-36.,-' since petitioner had 8ept on insistin0 that the sellin0 price should be lo#ered to P$,,1*,,+4.*1. !learl2 therefore, there #as no .eetin0 of the .inds bet#een the parties as to the price or consideration of the sale. The !% ratiocinated that petitioner<s ori0inal offer to purchase the sub;ect propert2 had not been accepted b2 respondent PN". In fact, it .ade a counter(offer throu0h its =une *, $63, letter specificall2 on the sellin0 price: petitioner did not a0ree to the counter(offer: and the ne0otiations did not prosper. Moreover, petitioner did not pa2 the balance of the purchase price #ithin the si9t2(da2 period set in the =une *, $63, letter of respondent PN". !onse5uentl2, there #as no perfected contract of sale, and as such, there #as no contract to rescind. %ccordin0 to the appellate court, the clai. for da.a0es and the counterclai. #ere correctl2 dis.issed b2 the court a 5uo for no evidence #as presented to support it. Respondent PN"<s letter dated =une -4, $633 cannot revive the failed ne0otiations bet#een the parties. Respondent PN" .erel2 as8ed petitioner to sub.it an a.ended offer to repurchase. @hile petitioner reiterated its re5uest for a lo#er sellin0 price and that the balance of the repurchase be reduced, ho#ever, respondent re;ected the proposal in a letter dated %u0ust $, $636. Petitioner filed a .otion for reconsideration, #hich the !% li8e#ise denied. Thus, petitioner filed the instant petition for revie# on certiorari, alle0in0 thatB I. TA !ODRT OF %PP %CS RR D ON % HD STION OF C%@ @A N IT RDC D TA%T TA R IS NO P RF !T D !ONTR%!T OF S%C " T@ N TA P TITION R %ND R SPOND NT. II. TA !ODRT OF %PP %CS RR D ON % HD STION OF C%@ @A N IT RDC D TA%T TA %MODNT OF PAP1/,,444.44 P%ID "E TA P TITION R IS NOT %N %RN ST MON E. III. TA !ODRT OF %PP %CS RR D ON % HD STION OF C%@ @A N IT RDC D TA%T TA F%ICDR OF TA P TITION R(%PP CC%NT TO SI)NIFE ITS !ONFORMITE TO TA T RMS !ONT%IN D IN PN"<S =DN *, $63, C TT R M %NS TA%T TA R @%S

NO V%CID %ND C )%CCE NFOR! %"C !ONTR%!T OF S%C " T@ P%RTI S.

N TA

IV. TA !ODRT OF %PP %CS RR D ON % HD STION OF C%@ TA%T NON(P%EM NT OF TA P TITION R(%PP CC%NT OF TA "%C%N! OF TA OFF R D PRI! IN TA C TT R OF PN" D%T D =DN *, $63,, @ITAIN SIFTE &+4' D%ES FROM NOTI! OF %PPROV%C !ONSTITDT S NO V%CID %ND C )%CCE NFOR! %"C !ONTR%!T OF S%C " T@ N TA P%RTI S. V. TA !ODRT OF %PP %CS S RIODSCE RR D @A N IT A CD TA%T TA C TT RS OF P TITION R(%PP CC%NT D%T D M%R!A $3, $66- %ND =DN /$, $66-, OFF RIN) TO "DE TA SD"= !T PROP RTE %T DIFF R NT %MODNT @ R PROOF TA%T TA R IS NO P RF !T D !ONTR%!T OF S%C .-3 The threshold issue is #hether or not petitioner and respondent PN" had entered into a perfected contract for petitioner to repurchase the propert2 fro. respondent. Petitioner .aintains that it had accepted respondent<s offer .ade throu0h the S%MD, to sell the propert2 forP$,,1*,,+4.44. @hen the acceptance #as .ade in its letter dated =une /,, $63*: it then deposited P1/,,444.44 #ith the S%MD as partial pa2.ent, evidenced b2 Receipt No. 613$6* #hich respondent had issued. Petitioner avers that the S%MD<s acceptance of the deposit a.ounted to an acceptance of its offer to repurchase. Moreover, as 0leaned fro. the letter of S%MD dated =une *, $63,, the PN" "oard of Directors had approved petitioner<s offer to purchase the propert2. It clai.s that this #as the suspensive condition, the fulfill.ent of #hich 0ave rise to the contract. Respondent could no lon0er unilaterall2 #ithdra# its offer to sell the propert2 for P$,,1*,,+4.*1, since the acceptance of the offer resulted in a perfected contract of sale: it #as obli0ed to re.it to respondent the balance of the ori0inal purchase price of P$,,1*,,+4.*1, #hile respondent #as obli0ed to transfer o#nership and deliver the propert2 to petitioner, confor.abl2 #ith %rticle $$,6 of the Ne# !ivil !ode. Petitioner posits that respondent #as proscribed fro. increasin0 the interest rate after it had accepted respondent<s offer to sell the propert2 for P$,,1*,,+4.44. !onse5uentl2, respondent could no lon0er validl2 .a8e a counter(offer of P$,6-$,136.33 for the purchase of the propert2. It li8e#ise .aintains that, althou0h theP1/,,444.44 #as considered as ?deposit for the repurchase of the propert2? in the receipt issued b2 the S%MD, the a.ount constitutes earnest .one2 as conte.plated in %rticle $*3/ of the Ne# !ivil !ode. Petitioner cites the rulin0s of this !ourt in Villonco v. Bormaheco-6 and Topacio v. Court of Appeals.*4 Petitioner avers that its failure to append its confor.it2 to the =une *, $63* letter of respondent and its failure to pa2 the balance of the price as fi9ed b2 respondent #ithin the +4(da2 period fro. notice #as to protest respondent<s breach of its obli0ation to petitioner. It did not a.ount to a re;ection of respondent<s offer to sell the propert2 since respondent #as .erel2 see8in0 to enforce its ri0ht to pa2 the balance of P$,,14,,+*.*1. In an2 event, respondent had the option either to accept the balance of the offered price or to cause the rescission of the contract. Petitioner<s letters dated March $3, $66- and =une /$, $66- to respondent durin0 the pendenc2 of the case in the RT! #ere .erel2 to co.pro.ise the pendin0 la#suit, the2 did not constitute

separate offers to repurchase the propert2. Such offer to co.pro.ise should not be ta8en a0ainst it, in accordance #ith Section /1, Rule $-4 of the Revised Rules of !ourt. For its part, respondent contends that the parties never 0raduated fro. the ?ne0otiation sta0e? as the2 could not a0ree on the a.ount of the repurchase price of the propert2. %ll that transpired #as an e9chan0e of proposals and counter(proposals, nothin0 .ore. It insists that a definite a0ree.ent on the a.ount and .anner of pa2.ent of the price are essential ele.ents in the for.ation of a bindin0 and enforceable contract of sale. There #as no such a0ree.ent in this case. Pri.aril2, the concept of ?suspensive condition? si0nifies a future and uncertain event upon the fulfill.ent of #hich the obli0ation beco.es effective. It clearl2 presupposes the e9istence of a valid and bindin0 a0ree.ent, the effectivit2 of #hich is subordinated to its fulfill.ent. Since there is no perfected contract in the first place, there is no basis for the application of the principles 0overnin0 ?suspensive conditions.? %ccordin0 to respondent, the State.ent of %ccount prepared b2 S%MD as of =une /,, $63* cannot be classified as a counter(offer: it is si.pl2 a recital of its total .onetar2 clai.s a0ainst petitioner. Moreover, the a.ount stated therein could not li8e#ise be considered as the counter(offer since as ad.itted b2 petitioner, it #as onl2 reco..endation #hich #as sub;ect to approval of the PN" "oard of Directors. Neither can the receipt b2 the S%MD of P1/,,444.44 be re0arded as evidence of a perfected sale contract. %s 0leaned fro. the parties< Stipulation of Facts durin0 the proceedin0s in the court a quo, the a.ount is .erel2 an ac8no#led0.ent of the receipt of P1/,,444.44 as deposit to repurchase the propert2. The deposit of P1/,,444.44 #as accepted b2 respondent on the condition that the purchase price #ould still be approved b2 its "oard of Directors. Respondent .aintains that its acceptance of the a.ount #as 5ualified b2 that condition, thus not absolute. Pendin0 such approval, it cannot be le0all2 clai.ed that respondent is alread2 bound b2 an2 contract of sale #ith petitioner. %ccordin0 to respondent, petitioner 8ne# that the S%MD has no capacit2 to bind respondent and that its authorit2 is li.ited to ad.inisterin0, .ana0in0 and preservin0 the properties and other special assets of PN". The S%MD does not have the po#er to sell, encu.ber, dispose of, or other#ise alienate the assets, since the po#er to do so .ust e.anate fro. its "oard of Directors. The S%MD #as not authori7ed b2 respondent<s "oard to enter into contracts of sale #ith third persons involvin0 corporate assets. There is absolutel2 nothin0 on record that respondent authori7ed the S%MD, or .ade it appear to petitioner that it represented itself as havin0 such authorit2. Respondent reiterates that S%MD had infor.ed petitioner that its offer to repurchase had been approved b2 the "oard sub;ect to the condition, a.on0 others, ?that the sellin0 price shall be the total ban8<s clai. as of docu.entation date 9 9 9 pa2able in cash &P1/,,444.44 alread2 deposited' #ithin +4 da2s fro. notice of approval.? % ne# State.ent of %ccount #as attached therein indicatin0 the total ban8<s clai. to be P$,6-$,-36.,- less deposit of P1/,,444.44, or P$,/4+,-36.44. Further.ore, #hile respondent<s "oard of Directors accepted petitioner<s offer to repurchase the propert2, the acceptance #as 5ualified, in that it re5uired a hi0her sale price and sub;ect to specified ter.s and conditions enu.erated therein. This 5ualified acceptance #as in effect a counter(offer, necessitatin0 petitioner<s acceptance in return.

T&e R+,-'. o/ (&e Co+r( The rulin0 of the appellate court that there #as no perfected contract of sale bet#een the parties on =une *, $63, is correct. % contract is a .eetin0 of .inds bet#een t#o persons #hereb2 one binds hi.self, #ith respect to the other, to 0ive so.ethin0 or to render so.e service. *$ Dnder %rticle $-$3 of the Ne# !ivil !ode, there is no contract unless the follo#in0 re5uisites concurB &$' !onsent of the contractin0 parties: &/' Ob;ect certain #hich is the sub;ect .atter of the contract: &-' !ause of the obli0ation #hich is established. !ontracts are perfected b2 .ere consent #hich is .anifested b2 the .eetin0 of the offer and the acceptance upon the thin0 and the cause #hich are to constitute the contract. */ Once perfected, the2 bind other contractin0 parties and the obli0ations arisin0 therefro. have the for. of la# bet#een the parties and should be co.plied #ith in 0ood faith. The parties are bound not onl2 to the fulfill.ent of #hat has been e9pressl2 stipulated but also to the conse5uences #hich, accordin0 to their nature, .a2 be in 8eepin0 #ith 0ood faith, usa0e and la#. *"2 the contract of sale, one of the contractin0 parties obli0ates hi.self to transfer the o#nership of and deliver a deter.inate thin0, and the other to pa2 therefor a price certain in .one2 or its e5uivalent.** The absence of an2 of the essential ele.ents #ill ne0ate the e9istence of a perfected contract of sale. %s the !ourt ruled in Boston Bank of the Philippines v. ManaloB*, % definite a0ree.ent as to the price is an essential ele.ent of a bindin0 a0ree.ent to sell personal or real propert2 because it seriousl2 affects the ri0hts and obli0ations of the parties. Price is an essential ele.ent in the for.ation of a bindin0 and enforceable contract of sale. The fi9in0 of the price can never be left to the decision of one of the contractin0 parties. "ut a price fi9ed b2 one of the contractin0 parties, if accepted b2 the other, 0ives rise to a perfected sale.*+ % contract of sale is consensual in nature and is perfected upon .ere .eetin0 of the .inds. @hen there is .erel2 an offer b2 one part2 #ithout acceptance of the other, there is no contract. *1 @hen the contract of sale is not perfected, it cannot, as an independent source of obli0ation, serve as a bindin0 ;uridical relation bet#een the parties.*3 In San Miguel Properties Philippines, nc. v. !uang,*6 the !ourt ruled that the sta0es of a contract of sale are as follo#sB &$' ne0otiation, coverin0 the period fro. the ti.e the prospective contractin0 parties indicate interest in the contract to the ti.e the contract is perfected: &/' perfection, #hich ta8es place upon the concurrence of the essential ele.ents of the sale #hich are the .eetin0 of the .inds of the parties as to the ob;ect of the contract and upon the price: and &-' consummation, #hich be0ins #hen the parties perfor. their respective underta8in0s under the contract of sale, cul.inatin0 in the e9tin0uish.ent thereof. % ne0otiation is for.all2 initiated b2 an offer, #hich, ho#ever, .ust be certain. ,4 %t an2 ti.e prior to the perfection of the contract, either ne0otiatin0 part2 .a2 stop the ne0otiation. %t this sta0e, the

offer .a2 be #ithdra#n: the #ithdra#al is effective i..ediatel2 after its .anifestation. To convert the offer into a contract, the acceptance .ust be absolute and .ust not 5ualif2 the ter.s of the offer: it .ust be plain, une5uivocal, unconditional and #ithout variance of an2 sort fro. the proposal. In A"elfa Properties, nc. v. Court of Appeals ,,$ the !ourt ruled thatB 9 9 9 The rule is that e9cept #here a for.al acceptance is so re5uired, althou0h the acceptance .ust be affir.ativel2 and clearl2 .ade and .ust be evidenced b2 so.e acts or conduct co..unicated to the offeror, it .a2 be sho#n b2 acts, conduct, or #ords of the acceptin0 part2 that clearl2 .anifest a present intention or deter.ination to accept the offer to bu2 or sell. Thus, acceptance .a2 be sho#n b2 the acts, conduct, or #ords of a part2 reco0ni7in0 the e9istence of the contract of sale. ,/ % 5ualified acceptance or one that involves a ne# proposal constitutes a counter(offer and a re;ection of the ori0inal offer. % counter(offer is considered in la#, a re;ection of the ori0inal offer and an atte.pt to end the ne0otiation bet#een the parties on a different basis. ,- !onse5uentl2, #hen so.ethin0 is desired #hich is not e9actl2 #hat is proposed in the offer, such acceptance is not sufficient to 0uarantee consent because an2 .odification or variation fro. the ter.s of the offer annuls the offer.,* The acceptance .ust be identical in all respects #ith that of the offer so as to produce consent or .eetin0 of the .inds. In this case, petitioner had until Februar2 $1, $63* #ithin #hich to redee. the propert2. Ao#ever, since it lac8ed the resources, it re5uested for .ore ti.e to redee.>repurchase the propert2 under such ter.s and conditions a0reed upon b2 the parties. ,, The re5uest, #hich #as .ade throu0h a letter dated %u0ust /,, $63-, #as referred to the respondent<s .ain branch for appropriate action.,+ "efore respondent could act on the re5uest, petitioner a0ain #rote respondent as follo#sB $. Dpon approval of our re5uest, #e #ill pa2 2our 0oodselves ON ADNDR D I FIFTE TAODS%ND P SOS &P$,4,444.44': /. @ithin si9 .onths fro. date of approval of our re5uest, #e #ill pa2 another FODR ADNDR D FIFTE TAODS%ND P SOS &P*,4,444.44': and -. The re.ainin0 balance to0ether #ith the interest and other e9penses that #ill be incurred #ill be paid #ithin the last si9 .onths of the one 2ear 0rave period re5uested for. ,1 @hen the petitioner #as told that respondent did not allo# ?01r(-1, re)em0(-o',?,3 it sent a letter to respondent<s President reiteratin0 its offer to purchase the propert2. ,6 There #as no response to petitioner<s letters dated Februar2 $4 and $,, $63*. The state.ent of account prepared b2 the S%MD statin0 that the net clai. of respondent as of =une /,, $63* #asP$,,1*,,+4.*1 cannot be considered an un5ualified acceptance to petitioner<s offer to purchase the propert2. The state.ent is but a co.putation of the a.ount #hich petitioner #as obli0ed to pa2 in case respondent #ould later a0ree to sell the propert2, includin0 interests, advances on insurance pre.iu., advances on realt2 ta9es, publication cost, re0istration e9penses and .iscellaneous e9penses. There is no evidence that the S%MD #as authori7ed b2 respondent<s "oard of Directors to accept petitioner<s offer and sell the propert2 for P$,,1*,,+4.*1. %n2 acceptance b2 the S%MD of

petitioner<s offer #ould not bind respondent. %s this !ourt ruled in AF #ealt$ %evelopment, nc. vs. %iesehuan Freight Services, nc.B+4 Section /- of the !orporation !ode e9pressl2 provides that the corporate po#ers of all corporations shall be e9ercised b2 the board of directors. =ust as a natural person .a2 authori7e another to do certain acts in his behalf, so .a2 the board of directors of a corporation validl2 dele0ate so.e of its functions to individual officers or a0ents appointed b2 it. Thus, contracts or acts of a corporation .ust be .ade either b2 the board of directors or b2 a corporate a0ent dul2 authori7ed b2 the board. %bsent such valid dele0ation>authori7ation, the rule is that the declarations of an individual director relatin0 to the affairs of the corporation, but not in the course of, or connected #ith the perfor.ance of authori7ed duties of such director, are held not bindin0 on the corporation. Thus, a corporation can onl2 e9ecute its po#ers and transact its business throu0h its "oard of Directors and throu0h its officers and a0ents #hen authori7ed b2 a board resolution or its b2(la#s. +$ It appears that the S%MD had prepared a reco..endation for respondent to accept petitioner<s offer to repurchase the propert2 even be2ond the one(2ear period: it reco..ended that petitioner be allo#ed to redee. the propert2 and pa2 P$,,1*,,+4.44 as the purchase price. Respondent later approved the reco..endation that the propert2 be sold to petitioner. "ut instead of the P$,,1*,,+4.*1 reco..ended b2 the S%MD and to #hich petitioner had previousl2 confor.ed, respondent set the purchase price at P/,++4,444.44. In fine, respondent<s acceptance of petitioner<s offer #as 5ualified, hence can be at .ost considered as a counter(offer. If petitioner had accepted this counter(offer, a perfected contract of sale #ould have arisen: as it turns out, ho#ever, petitioner .erel2 sou0ht to have the counter(offer reconsidered. This re5uest for reconsideration #ould later be re;ected b2 respondent. @e do not a0ree #ith petitioner<s contention that the P1/,,444.44 it had re.itted to respondent #as ?earnest .one2? #hich could be considered as proof of the perfection of a contract of sale under %rticle $*3/ of the Ne# !ivil !ode. The provision readsB %RT. $*3/. @henever earnest .one2 is 0iven in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. This contention is li8e#ise ne0ated b2 the stipulation of facts #hich the parties entered into in the trial courtB 3. On =une 3, $63*, the Special %ssets Mana0e.ent Depart.ent &S%MD' of PN" prepared an updated State.ent of %ccount sho#in0 MM!!<s total liabilit2 to PN" as of =une /,, $63* to be P$,,1*,,+4.*1 and reco..ended this a.ount as the repurchase price of the sub;ect propert2. 6. On =une /,, $63*, MM!! paid P1/,,444.44 to PN" as deposit to repurchase the propert2. The deposit of P725,000 was accepted by PNB on the condition that the purchase price is still subject to the approval of the PNB Board .+/ Thus, the P1/,,444.44 #as .erel2 a deposit to be applied as part of the purchase price of the propert2, in the event that respondent #ould approve the reco..endation of S%MD for respondent to accept petitioner<s offer to purchase the propert2 for P$,,1*,,+4.*1. Dnless and until the

respondent accepted the offer on these ter.s, no perfected contract of sale #ould arise. %bsent proof of the concurrence of all the essential ele.ents of a contract of sale, the 0ivin0 of earnest .one2 cannot establish the e9istence of a perfected contract of sale. +It appears that, per its letter to petitioner dated =une *, $63,, the respondent had decided to accept the offer to purchase the propert2 for P$,6-$,-36.,-. Ao#ever, this a.ounted to an a.end.ent of respondent<s 5ualified acceptance, or an a.ended counter(offer, because #hile the respondent lo#ered the purchase price, it still declared that its acceptance #as sub;ect to the follo#in0 ter.s and conditionsB $. That the sellin0 price shall be the total "an8<s clai. as of docu.entation date &pls. see attached state.ent of account as of ,(-$(3,', pa2able in cash &P1/,,444.44 alread2 deposited' #ithin si9t2 &+4' da2s fro. notice of approval: /. The "an8 sells onl2 #hatever ri0hts, interests and participation it .a2 have in the propert2 and 2ou are char0ed #ith full 8no#led0e of the nature and e9tent of said ri0hts, interests and participation and #aive 2our ri0ht to #arrant2 a0ainst eviction. -. %ll ta9es and other 0overn.ent i.posts due or to beco.e due on the propert2, as #ell as e9penses includin0 costs of docu.ents and science sta.ps, transfer fees, etc., to be incurred in connection #ith the e9ecution and re0istration of all coverin0 docu.ents shall be borne b2 2ou: *. That 2ou shall underta8e at 2our o#n e9pense and account the e;ect.ent of the occupants of the propert2 sub;ect of the sale, if there are an2: ,. That upon 2our failure to pa2 the balance of the purchase price #ithin si9t2 &+4' da2s fro. receipt of advice acceptin0 2our offer, 2our deposit shall be forfeited and the "an8 is thenceforth authori7ed to sell the propert2 to other interested parties. +. That the sale shall be sub;ect to such other ter.s and conditions that the Ce0al Depart.ent .a2 i.pose to protect the interest of the "an8. +* It appears that althou0h respondent re5uested petitioner to confor. to its a.ended counter(offer, petitioner refused and instead re5uested respondent to reconsider its a.ended counter(offer. Petitioner<s re5uest #as ulti.atel2 re;ected and respondent offered to refund its P1/,,444.44 deposit. In su., then, there #as no perfected contract of sale bet#een petitioner and respondent over the sub;ect propert2. IN LIGHT O2 ALL THE 2OREGOING, the petition is DENIED. The assailed decision is A22IRMED. !osts a0ainst petitioner Manila Metal !ontainer !orporation. SO ORDERED. &nares'Santiago, (., )orking Chairperson, Austria'Martine*, an" Chico'+a*ario, ((., concur. Pangani,an, C.(., retired as of Dece.ber 1, /44+.