*

G.R. No. 166862. December 20, 2006.

MANILA
METAL
CONTAINER
CORPORATION,
petitioner, REYNALDO C. TOLENTINO, intervenor, vs.
PHILIPPINE NATIONAL BANK, respondent, DMCI
PROJECT DEVELOPERS, INC., intervenor.
Contracts Requisites 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.
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. Once
perfected, they bind other contracting parties and the obligations
arising therefrom have the form of law between the parties and
should be complied with in good faith. The parties are bound not
only to the fulfillment of what has been expressly stipulated but
also to the consequences which, according to their nature, may be
in keeping with good faith, usage and law.
Same Sales 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 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.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 therefor 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. As the Court ruled in Boston Bank of the
Philippines v. Manalo, 482 SCRA 108 (2006): A definite
agreement as to the price is an essential element of

_______________
*

FIRST DIVISION.

445

VOL. 511, DECEMBER 20, 2006

445

Manila Metal Container Corporation vs.Philippine National Bank

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. 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.
Same Same Stages of a Contract of Sale.In San Miguel
Properties Philippines, Inc. v. Huang, 336 SCRA 737 (2000), the
Court ruled that the stages of a contract of sale are as follows: (1)
negotiation, covering the period from the time the prospective
contracting parties indicate interest in the contract to the time
the contract is perfected (2) perfection, which takes place upon
the concurrence of the essential elements of the sale which are the
meeting of the minds of the parties as to the object of the contract
and upon the price and (3) consummation, which begins when the
parties perform their respective undertakings under the contract
of sale, culminating in the extinguishment thereof.
Same Same Same To convert an offer into a contract, the
acceptance must be absolute and must not qualify the terms of the
offerit must be plain, unequivocal, unconditional and without
variance of any sort from the proposal.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.
Same Same Same A counteroffer is considered in law, a
rejection of the original offer and an attempt to end the negotiation
between the parties on a different basis.A qualified acceptance or
one that involves a new proposal constitutes a counteroffer and a
446

446

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine National

Bank

rejection of the original offer. A counteroffer 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.
Same Same Corporation Law Board of Directors Contracts
or acts of a corporation must be made either by the board of
directors or by a corporate agent duly authorized by the board
absent such valid delegation/authorization, the rule is that the
declarations of an individual director relating to the affairs of the
corporation, but not in the course of, or connected with the
performance of authorized duties of such director, are held not
binding on the corporation.There is no evidence that the SAMD
was authorized by respondents Board of Directors to accept
petitioners offer and sell the property for P1,574,560.47. Any
acceptance by the SAMD of petitioners offer would not bind
respondent. As this Court ruled in AF Realty Development, Inc. vs.
Diesehuan Freight Services, Inc., 373 SCRA 385 (2002): Section 23
of the Corporation Code expressly provides that the corporate
powers of all corporations shall be exercised by the board of
directors. Just as a natural person may authorize another to do
certain acts in his behalf, so may the board of directors of a
corporation validly delegate some of its functions to individual
officers or agents appointed by it. Thus, contracts or acts of a
corporation must be made either by the board of directors or by a
corporate agent duly authorized by the board. Absent such valid

delegation/authorization, the rule is that the declarations of an

individual director relating to the affairs of the corporation, but
not in the course of, or connected with the performance of
authorized duties of such director, are held not binding on the
corporation.
Same Same Earnest Money 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 P725,000.00 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
P1,574,560.47. Unless
447

VOL. 511, DECEMBER 20, 2006

447

Manila Metal Container Corporation vs. Philippine National

Bank

and until the respondent accepted the offer on these terms, no

perfected contract of sale would arise. 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.

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Calleja, Saulog Law Offices for petitioner.
The Legal Department for respondent PNB.
John R. Sadullo and Francis Allan A. Rubio for
intervenor DMCIPPI.
CALLEJO, SR., J.:
Before us
is a petition for review on certiorari of the
1
Decision of the Court of Appeals2 (CA) in CAG.R. No.
46153 which affirmed the decision of the Regional Trial
Court (RTC), Branch 71, Pasig
City, in Civil Case No.
3
58551, and its Resolution denying the motion for
reconsideration filed by petitioner Manila Metal Container
Corporation (MMCC).

The Antecedents
Petitioner was the owner of a 8,015 square meter parcel of
land located in Mandaluyong (now a City), Metro Manila.
The property was covered by Transfer Certificate of Title
(TCT) No. 332098 of the Registry of Deeds of Rizal. To
secure a P900,000.00 loan it had obtained from respondent
Philippine
_______________
Penned by Associate Justice Corona IbaySomera (retired) with

Associate Justices Portia AlioHormachuelos and ElviJohn S. Asuncion,

concurring Rollo, pp. 4760.
2

Penned by Judge Celso D. Lavia Id., at pp. 89103.

Penned by Associate Justice Portia AlioHormachuelos with

Associate Justices Rebecca De GuiaSalvador and Aurora Santiago

Lagman, concurring Id., at pp. 6264.
448

448

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine
National Bank

National Bank (PNB), petitioner executed a real estate

mortgage over the lot. Respondent PNB later granted
petitioner a new credit accommodation of P1,000,000.00
and, on November
16, 1973, petitioner executed an
4
Amendment of Real Estate Mortgage over its property. On
March 31, 1981, petitioner secured another loan of
P653,000.00 from respondent PNB, payable in quarterly
installments
of P32,650.00, plus interests and other
5
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
P911,532.21, petitioners outstanding
obligation to
6
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 the7 winning bidder for P1,000,000.00.
The Certificate of Sale issued in its favor was registered
with the Office of the Register of Deeds of Rizal, and was

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
8
extension of time to redeem/repurchase the property. In its
reply dated August 30, 1983, respondent PNB informed
petitioner that the request had been referred to its Pasay
9
City Branch for appropriate action and recommendation.
_______________
4

Exhibit A, Rollo, p. 65.

Exhibit B, Id., at p. 66.

Statement of Account, Exhibit D, Records, pp. 2023.

Exhibit E, Id., at p. 24.

Exhibits F and 17, Rollo, p. 69.

Exhibit F1, Id., at p. 68.

449

VOL. 511, DECEMBER 20, 2006

449

Manila Metal Container Corporation vs. Philippine

National Bank
10

In a letter dated February 10, 1984, petitioner reiterated

its request for a one year extension from February 17, 1984
within which to redeem/repurchase the property on
installment basis. It reiterated
its request to repurchase
11
the property on installment. Meanwhile, some PNB Pasay
City Branch personnel informed petitioner that as a matter
12
of policy, the bank does not accept partial redemption.
Since petitioner failed to redeem the property, the
Register of Deeds cancelled TCT No. 32098 on June 1,
13
1984, and issued a new title in favor of respondent PNB.
Petitioners offers had not yet been acted upon by
respondent PNB.
Meanwhile,
the
Special
Assets
Management
Department (SAMD) had prepared a statement of account,
and as of June 25, 1984 petitioners obligation amounted to
P1,574,560.47. This included the bid price of P1,056,924.50,
interest, advances of insurance premiums, advances on
realty taxes, registration
expenses, miscellaneous expenses
14
and publication cost. When apprised of the statement of
account, petitioner remitted P725,000.00 to respondent
PNB as deposit to repurchase,
and Official Receipt No.
15
978191 was issued to it.

In the meantime, the SAMD recommended to the

management of respondent PNB that petitioner be allowed
to repurchase the property for P1,574,560.00. 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 P2,660,000.00, its
minimum market value. Respondent PNB gave petitioner
until December 15, 1984 to act on the proposal otherwise,
its P725,000.00 deposit would be
_______________
10

Exhibits F2 and 18, Id., at p. 70.

11

Exhibits F3 and 20, Id., at p. 71.

12

Exhibit F4, Id., at p. 72.

13

Exhibit B, Records, pp. 264265.

14

Exhibit G, Rollo, p. 73.

15

Exhibit G1, Id., at p. 75.

450

450

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine
National Bank

returned
and the property would be sold to other interested
16
buyers.
Petitioner, however, did not agree to respondent PNBs
proposal. Instead, it wrote another letter dated December
12, 1984 requesting for a reconsideration. Respondent PNB
replied in a letter dated December 28, 1984, wherein it
reiterated its proposal that petitioner purchase the
property for P2,660,000.00. PNB again informed petitioner
that it would return the deposit should petitioner
desire to
17
withdraw its offer to purchase the property. On February
25, 1985, petitioner, through counsel, requested that PNB
reconsider its letter dated December 28, 1984. Petitioner
declared that it had already agreed to the SAMDs offer to
purchase the property for P1,574,560.47, and that was why
it had paid P725,000.00. Petitioner warned respondent
PNB that it would
seek judicial recourse should PNB insist
18
on the position.
On June 4, 1985, respondent PNB informed petitioner
that the PNB Board of Directors had accepted petitioners
offer to purchase the property, but for P1,931,389.53
in
19
cash less the P725,000.00 already deposited with it. On

page two of the letter was a space above the typewritten

name of petitioners President, Pablo Gabriel, where he
was to affix his signature. However, Pablo Gabriel did not
conform to the letter
but merely indicated therein that he
20
had received it. Petitioner did not respond, so PNB
requested petitioner in a letter dated June 30, 1988 to
submit an amended offer to repurchase. Petitioner rejected
respondents proposal in a letter dated July 14, 1988. It
maintained that respondent PNB had agreed to sell the
property for P1,574,560.47, and that since its P725,000.00
downpayment had been accepted, respondent
_______________
16

Exhibits H and 22, Id., at p. 76.

17

Exhibits H and 24, Id., at p. 74.

18

Exhibits I and 25, Records, pp. 3436.

19

Exhibits J and 26, Rollo, pp. 8081, Exhibits J2 and 26B,

Rollo, p. 82.
20

Exhibits J1 and 26A, Id., at p. 81.

451

VOL. 511, DECEMBER 20, 2006

451

Manila Metal Container Corporation vs. Philippine

National Bank

PNB was proscribed

from increasing the purchase price of
21
the property. Petitioner averred that it had a net balance
payable in the amount of P643,452.34. Respondent PNB,
however, rejected petitioners offer to pay the
balance of
22
P643,452.34 in a letter dated August 1, 1989.
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. To support its cause of action
for specific performance, it alleged the following:
34. As early as June 25, 1984, PNB had accepted the down
payment from Manila Metal in the substantial amount of
P725,000.00 for the redemption/repurchase price of P1,574,560.47
as approved by its SMAD and considering the reliance made by
Manila Metal and the long time that has elapsed, the approval of
the higher management of the Bank to confirm the agreement of
its SMAD is clearly a potestative condition which cannot legally
prejudice Manila Metal which has acted and relied on the
approval of SMAD. The Bank cannot take advantage of a

condition which is entirely dependent upon its own will after

accepting and benefiting from the substantial payment made by
Manila Metal.
35. PNB approved the repurchase price of P1,574,560.47 for
which it accepted P725,000.00 from Manila Metal. PNB cannot
take advantage of its own delay and long inaction in demanding a
higher amount based on unilateral computation of interest rate
without the consent of Manila Metal.

Petitioner later filed an amended complaint and supported

its claim for damages with the following arguments:
36. That in order to protect itself against the wrongful and
malicious acts of the defendant Bank, plaintiff is constrained to
engage the services of counsel at an agreed fee of P50,000.00 and
to incur litigation expenses of at least P30,000.00, which the
defendant PNB should be condemned to pay the plaintiff Manila
Metal.
_______________
21

Exhibits K to K4, Id., at pp. 8488.

22

Exhibits M and 30, Records, p. 46.

452

452

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine
National Bank

37. That by reason of the wrongful and malicious actuations of

defendant PNB, plaintiff Manila Metal suffered besmirched
reputation for which defendant PNB is liable for moral damages
of at least P50,000.00.
38. That for the wrongful and malicious act of defendant PNB
which are highly reprehensible, exemplary damages should be
awarded in favor of the plaintiff by way of
example or correction
23
for the public good of at least P30,000.00.

Petitioner prayed that, after due proceedings, judgment be

rendered in its favor, thus:
a) Declaring the Amended Real Estate Mortgage (Annex A)
null and void and without any legal force and effect.
b) Declaring defendants acts of extrajudicially foreclosing
the mortgage over plaintiffs property and setting it for
auction sale null and void.

c) Ordering the defendant Register of Deeds to cancel the

new title issued in the name of PNB (TCT NO. 43792)
covering the property described in paragraph 4 of the
Complaint, to reinstate TCT No. 37025 in the name of
Manila Metal and to cancel the annotation of the
mortgage in question at the back of the TCT No. 37025
described in paragraph 4 of this Complaint.
d) Ordering the defendant PNB to return and/or deliver
physical possession of the TCT No. 37025 described in
paragraph 4 of this Complaint to the plaintiff Manila
Metal.
e) Ordering the defendant PNB to pay the plaintiff Manila
Metals actual damages, moral and exemplary damages in
the aggregate amount of not less than P80,000.00 as may
be warranted by the evidence and fixed by this Honorable
Court in the exercise of its sound discretion, and
attorneys fees of P50,000.00 and litigation expenses of at
least P30,000.00 as may be proved during the trial, and
costs of suit.
Plaintiff likewise prays for such further 24reliefs which may be
deemed just and equitable in the premises.
_______________
23

Records, pp. 6367.

24

Id., at pp. 6768.

453

VOL. 511, DECEMBER 20, 2006

453

Manila Metal Container Corporation vs. Philippine

National Bank

In its Answer to the complaint, respondent PNB averred,

as a special and affirmative defense, that it had acquired
ownership over the property after the period to redeem had
elapsed. It claimed that no contract of sale was perfected
between it and petitioner after the period to redeem the
property had expired.
During pretrial, the parties agreed to submit the
case
25
for decision, based on their stipulation of facts. The
parties agreed to limit the issues to the following:
_______________

1. The subject property is an eight thousand fifteen (8,015) square

25

meter land located at Dansalan St., Barrio Barranca, Mandaluyong, Metro

Manila, originally registered in the name of Manila Metal Container
Corporation (MMCC) under Transfer Certificate of Title No. 332098 of the
Registry of Deeds for the Province of Rizal.
2. On August 5, 1982, the Philippine National Bank (PNB) filed with
the Provincial Sheriff of Rizal a petition for extrajudicial foreclosure and
sale of the subject property under Act No. 3135, as amended, and
Presidential Decree No. 385 to satisfy the mortgage indebtedness of
MMCC in the amount of P911,532.21 plus interest at the rate of 21% per
annum on the amount of P679,768.29 and 3% penalty charge as well as
10% attorneys fees on the total amount due and the Sheriffs fees.
3. At the public auction sale held on September 28, 1982, the Provincial
Sheriff of Rizal sold the subject property to PNB as the sole and highest
bidder for P1,056,924.40.
4. The period of redemption of the property was until February 17,
1984.
5. On August 25, 1983, MMCC requested PNB by its latter of even date
for the opportunity to redeem/repurchase the property by giving them
more time to do so under terms and conditions which may be agreed upon.
6. On August 30, 1983, MMCCs said letter was referred by PNB to its
Pasay City Branch for appropriate action.
7. On March 1, 1984, TCT No. 332078 in the name of MMCC was
cancelled. In its steed, the Register of Deeds of Mandaluyong issued TCT
No. 43792 in the name of PNB.
454

454

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine
National Bank

1. Whether or not the June 4, 1985 letter of the

defendant approving/accepting plaintiffs offer to
purchase the property is still valid and legally
enforceable.
_______________
8. On June 8, 1984, the Special Assets Management Department
(SAMD) of PNB prepared an updated Statement of Account showing
MMCCs total liability to PNB as of June 25, 1984 to be P1,574,560.47 and
recommended this amount as the repurchase price of the subject property.
9. On June 25, 1984, MMCC paid P725,000.00 to PNB as deposit to
repurchase the property. 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.

10. In its letters dated November 14, 1984 and December 28, 1984,
Special Assets Management Department formally informed MMCC
President Pablo Gabriel that MMCCs offer to repurchase the bank
acquired Mandaluyong property was returned by top management as the
offered price was too low. PNB then proposed that the offered repurchase
price be increased to at least the then minimum market value of the
property that it is P2,660,000.00.
11. On June 4, 1985, PNBs SAMD informed MMCC by letter that its
offer to purchase the subject property has been approved by the PNB
Board, subject to the condition among others, that the selling price shall
be the total banks claim as of documentation date payable within sixty
(60) days from notice of approval.
12. MMCC did not signify its conformity to the terms contained in
PNBs June 4, 1985 letter.
13. By letter dated June 30, 1988, PNBs SAMD gave MMCC fifteen
(15) days from receipt thereof to submit its amended repurchase offer.
Otherwise, PNB will be constrained to cancel the approved sale in favor of
MMCC and advertise the property for sale.
14. On July 14, 1988, MMCC reiterated its request to PNB to reduce
the balance of the repurchase price to P643,452.34, which request was
denied by PNB in its letter dated August 1, 1989. PNB then informed
MMCC that it is refunding the deposit of P725,000 at any time during
banking hours and that it will advertise the property for sale thru public
bidding.
15. In a letter dated September 20, 1989, PNB demanded MMCC to
vacate the premises.
455

VOL. 511, DECEMBER 20, 2006

455

Manila Metal Container Corporation vs. Philippine

National Bank

2. Whether or not the plaintiff has waived its right to

purchase the property when it failed to conform
with the conditions set forth by the defendant in its
letter dated June 4, 1985.
3. Whether or not there26is a perfected contract of sale
between the parties.
While the case was pending, respondent PNB demanded,
on September 20, 1989, that27petitioner vacate the property
within 15 days from notice, but petitioners refused to do
so.
On March 18, 1993, petitioner
offered to repurchase the
28
property for P3,500,000.00. The offer was however
rejected

_______________
16. In a letter dated May 3, 1992, Mr. Bayani Gabriel and Magtanggol
Gabriel children of MMCC President Mr. Pablo Gabriel requested once
again to buy back the subject property. In reply, PNB informed the
Gabriels in a letter dated June 18, 1992 that it can recommend the sale of
the property for P25 M subject to the approval of the PNB Board and to
other terms and conditions.
17. In a letter dated March 18, 1993, MMCC proposed to repurchase
the property for P3.5 M but PNB informed MMCC in its letter dated April
13, 1993 that, as a matter of policy, all assets acquired by the bank thru
foreclosure sale can only be disposed of at market value or banks claim
whichever is higher and that PNB cannot accommodate MMCCs request
to repurchase the property for P3.5 Million which as of the banks latest
appraisal has a market value of P30 Million.
18. The latest offer of MMCC per letter dated June 21, 1993 is P4,250
Million which offer was denied by PNB in its letter dated September 13,
1993, reiterating PNBs policy that sale of foreclosed assets shall be based
on the current market value of the property, and that the offer is too low.
19. The claims for annulment of mortgage and mortgage foreclosure in
the amended complaint are already waived, cancelled and/or withdrawn
thereby leaving the claims for specific performance and damages as the
remaining issues to be resolved in the instant case.
26

Records, p. 267.

27

Exhibit L, Id., at p. 281.

28

Exhibit O, Id., at pp. 286289.

456

456

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine
National Bank

by respondent PNB, in a letter dated April 13, 1993.

According to it, the prevailing market value of the property
was approximately P30,000,000.00, and as a matter of
policy,29it could not sell the property for less than its market
value. On June 21, 1993, petitioner offered
to purchase
30
the property for P4,250,000.00 in cash. The offer was
31
again rejected by respondent PNB on September 13, 1993.
On May 31, 1994, the trial court rendered judgment
dismissing the amended complaint and respondent PNBs
counterclaim. It ordered respondent PNB
to refund the
32
P725,000.00 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
P643,422.34 was way below the P1,206,389.53 which
respondent PNB had demanded. It further declared that
the P725,000.00 remitted by petitioner to respondent PNB
on June 4, 1985 was a deposit, and not a downpayment or
earnest money.
On appeal to the CA, petitioner made the following
allegations:
I
THE LOWER COURT ERRED IN RULING THAT
DEFENDANTAPPELLEES LETTER DATED 4 JUNE 1985
APPROVING/ACCEPTING PLAINTIFFAPPELLANTS OFFER
TO PURCHASE THE SUBJECT PROPERTY IS NOT VALID
AND ENFORCEABLE.
_______________
29

Exhibit P, Id., at p. 290.

30

Exhibit Q, Id., at p. 291.

31

Exhibit R, Id., at p. 292.

32

Records, pp. 371381.

457

VOL. 511, DECEMBER 20, 2006

457

Manila Metal Container Corporation vs. Philippine

National Bank
II
THE LOWER COURT ERRED IN RULING THAT THERE WAS
NO PERFECTED CONTRACT OF SALE BETWEEN
PLAINTIFFAPPELLANT AND DEFENDANTAPPELLEE.
III
THE LOWER COURT ERRED IN RULING THAT
PLAINTIFFAPPELLLANT
WAIVED
ITS
RIGHT
TO
PURCHASE THE SUBJECT PROPERTY WHEN IT FAILED TO
CONFORM
WITH
CONDITIONS
SET
FORTH
BY
DEFENDANTAPPELLEE IN ITS LETTER DATED 4 JUNE
1985.

IV
THE LOWER COURT ERRED IN DISREGARDING THE
FACT THAT IT WAS THE DEFENDANTAPPELLEE WHICH
RENDERED IT DIFFICULT IF NOT IMPOSSIBLE FOR
PLAINTIFFAPPELLANT TO COMPLETE THE BALANCE OF
THEIR PURCHASE PRICE.
V
THE LOWER COURT ERRED IN DISREGARDING THE
FACT THAT THERE WAS NO VALID RESCISSION OR
CANCELLATION
OF
SUBJECT
CONTRACT
OF
REPURCHASE.
VI
THE LOWER COURT ERRED IN DECLARING THAT
PLAINTIFF FAILED AND REFUSED TO SUBMIT THE
AMENDED REPURCHASE OFFER.
VII
THE LOWER COURT ERRED IN DISMISSING
AMENDED COMPLAINT OF PLAINTIFFAPPELLANT.

THE

VIII
THE LOWER COURT ERRED IN NOT AWARDING
PLAINTIFFAPPELLANT
ACTUAL,
MORAL
AND
EXEMPLARY
DAMAGES,
ATTOTRNEYS
FEES
AND
33
LITIGATION EXPENSES.
_______________
33

Rollo, pp. 5253.

458

458

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine
National Bank

Meanwhile, on June 17, 1993, petitioners Board of

Directors approved Resolution No. 3004, where it waived,
assigned and transferred its rights over the property
covered by TCT No. 33099 and TCT No.
37025 in favor of
34
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 plaintiffappellant. On July 3514, 1993, the CA issued a
resolution granting the motion, and likewise granted the
motion of Reynaldo Tolentino substituting petitioner
MMCC, as plaintiffappellant,
and his motion to withdraw
36
as intervenor.
The CA rendered judgment
on May 11, 2000 affirming
37
the decision of the RTC. It declared that petitioner
obviously never agreed to the selling price proposed by
respondent PNB (P1,931,389.53) since petitioner had kept
on insisting that the selling price should be lowered to
P1,574,560.47. Clearly therefore, there was no meeting of
the minds between the parties as to the price or
consideration of the sale.
The CA ratiocinated that petitioners original offer to
purchase the subject property had not been accepted by
respondent PNB. In fact, it made a counteroffer through
its June 4, 1985 letter specifically on the selling price
petitioner did not agree to the counteroffer and the
negotiations did not prosper. Moreover, petitioner did not
pay the balance of the purchase price within the sixtyday
period set in the June 4, 1985 letter of respondent PNB.
Consequently, there was no perfected contract of sale, and
as such, there was no contract to rescind.
According to the appellate court, the claim for damages
and the counterclaim were correctly dismissed by the court
a quo
_______________
34

CA Rollo, pp. 158159.

35

Id., at pp. 263266.

36

Id., at pp. 360364.

37

Rollo, pp. 4760.

459

VOL. 511, DECEMBER 20, 2006

459

Manila Metal Container Corporation vs. Philippine

National Bank

for no evidence was presented to support it. Respondent

PNBs letter dated June 30, 1988 cannot revive the failed
negotiations between the parties. Respondent PNB merely
asked petitioner to submit an amended offer to repurchase.
While petitioner reiterated its request for a lower selling

price and that the balance of the repurchase be reduced,

however, respondent rejected the proposal in a letter dated
August 1, 1989.
Petitioner filed a motion for reconsideration, which the
CA likewise denied.
Thus, petitioner filed the instant petition for review on
certiorari, alleging that:
I. THE COURT OF APPEALS ERRED ON A
QUESTION OF LAW WHEN IT RULED THAT
THERE IS NO PERFECTED CONTRACT OF
SALE BETWEEN THE PETITIONER AND
RESPONDENT.
II. THE COURT OF APPEALS ERRED ON A
QUESTION OF LAW WHEN IT RULED THAT
THE AMOUNT OF PHP725,000.00 PAID BY THE
PETITIONER IS NOT AN EARNEST MONEY.
III. THE COURT OF APPEALS ERRED ON A
QUESTION OF LAW WHEN IT RULED THAT
THE
FAILURE
OF
THE
PETITIONER
APPELLANT TO SIGNIFY ITS CONFORMITY TO
THE TERMS CONTAINED IN PNBS JUNE 4,
1985 LETTER MEANS THAT THERE WAS NO
VALID
AND
LEGALLY
ENFORCEABLE
CONTRACT OF SALE BETWEEN THE PARTIES.
IV. THE COURT OF APPEALS ERRED ON A
QUESTION OF LAW THAT NONPAYMENT OF
THE
PETITIONERAPPELLANT
OF
THE
BALANCE OF THE OFFERED PRICE IN THE
LETTER OF PNB DATED JUNE 4, 1985, WITHIN
SIXTY (60) DAYS FROM NOTICE OF APPROVAL
CONSTITUTES NO VALID AND LEGALLY
ENFORCEABLE
CONTRACT
OF
SALE
BETWEEN THE PARTIES.
V. THE COURT OF APPEALS SERIOUSLY ERRED
WHEN IT HELD THAT THE LETTERS OF
PETITIONERAPPELLANT DATED MARCH 18,
1993 AND JUNE 21, 1993, OFFERING TO BUY
THE SUBJECT PROPERTY AT DIFFERENT
AMOUNT
460

460

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine
National Bank

WERE PROOF THAT THERE

IS NO PERFECTED
38
CONTRACT OF SALE.
The threshold issue is whether or not petitioner and
respondent PNB had entered into a perfected contract for
petitioner to repurchase the property from respondent.
Petitioner maintains that it had accepted respondents
offer made through the SAMD, to sell the property for
P1,574,560.00. When the acceptance was made in its letter
dated June 25, 1984 it then deposited P725,000.00 with
the SAMD as partial payment, evidenced by Receipt No.
978194 which respondent had issued. Petitioner avers that
the SAMDs acceptance of the deposit amounted to an
acceptance of its offer to repurchase. Moreover, as gleaned
from the letter of SAMD dated June 4, 1985, the PNB
Board of Directors had approved petitioners offer to
purchase the property. It claims that this was the
suspensive condition, the fulfillment of which gave rise to
the contract. Respondent could no longer unilaterally
withdraw its offer to sell the property for P1,574,560.47,
since the acceptance of the offer resulted in a perfected
contract of sale it was obliged to remit to respondent the
balance of the original purchase price of P1,574,560.47,
while respondent was obliged to transfer ownership and
deliver the property to petitioner, conformably with Article
1159 of the New Civil Code.
Petitioner posits that respondent was proscribed from
increasing the interest rate after it had accepted
respondents offer to sell the property for P1,574,560.00.
Consequently, respondent could no longer validly make a
counteroffer of P1,931,789.88 for the purchase of the
property. It likewise maintains that, although the
P725,000.00 was considered as deposit for the repurchase
of the property in the receipt issued by the SAMD, the
amount constitutes earnest money as contemplated in
Article 1482 of the New Civil Code. Peti
_______________
38

Id., at p. 25.
461

VOL. 511, DECEMBER 20, 2006

Manila Metal Container Corporation vs. Philippine
National Bank

461

tioner cites
the rulings of this Court in
Villonco v.
39
40
Bormaheco and Topacio v. Court of Appeals.
Petitioner avers that its failure to append its conformity
to the June 4, 1984 letter of respondent and its failure to
pay the balance of the price as fixed by respondent within
the 60day period from notice was to protest respondents
breach of its obligation to petitioner. It did not amount to a
rejection of respondents offer to sell the property since
respondent was merely seeking to enforce its right to pay
the balance of P1,570,564.47. In any event, respondent had
the option either to accept the balance of the offered price
or to cause the rescission of the contract.
Petitioners letters dated March 18, 1993 and June 21,
1993 to respondent during the pendency of the case in the
RTC were merely to compromise the pending lawsuit, they
did not constitute separate offers to repurchase the
property. Such offer to compromise should not be taken
against it, in accordance with Section 27, Rule 130 of the
Revised Rules of Court.
For its part, respondent contends that the parties never
graduated from the negotiation stage as they could not
agree on the amount of the repurchase price of the
property. All that transpired was an exchange of proposals
and counterproposals, nothing more. It insists that a
definite agreement on the amount and manner of payment
of the price are essential elements in the formation of a
binding and enforceable contract of sale. There was no such
agreement in this case. Primarily, the concept of
suspensive condition signifies a future and uncertain
event upon the fulfillment of which the obligation becomes
effective. It clearly presupposes the existence of a valid and
binding agreement, the effectivity of which is subordinated
to its fulfillment. Since there is no perfected contract in the
first place, there is no basis for the
_______________
39

G.R. No. L26872, July 25, 1975, 65 SCRA 352.

40

G.R. No. 102606, July 3, 1992, 211 SCRA 291, 295.

462

462

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine
National Bank

application of the principles governing suspensive

conditions.
According to respondent, the Statement of Account
prepared by SAMD as of June 25, 1984 cannot be classified
as a counteroffer it is simply a recital of its total monetary
claims against petitioner. Moreover, the amount stated
therein could not likewise be considered as the counter
offer since as admitted by petitioner, it was only
recommendation which was subject to approval of the PNB
Board of Directors.
Neither can the receipt by the SAMD of P725,000.00 be
regarded as evidence of a perfected sale contract. As
gleaned from the parties Stipulation of Facts during the
proceedings in the court a quo, the amount is merely an
acknowledgment of the receipt of P725,000.00 as deposit to
repurchase the property. The deposit of P725,000.00 was
accepted by respondent on the condition that the purchase
price would still be approved by its Board of Directors.
Respondent maintains that its acceptance of the amount
was qualified by that condition, thus not absolute. Pending
such approval, it cannot be legally claimed that respondent
is already bound by any contract of sale with petitioner.
According to respondent, petitioner knew that the
SAMD has no capacity to bind respondent and that its
authority is limited to administering, managing and
preserving the properties and other special assets of PNB.
The SAMD does not have the power to sell, encumber,
dispose of, or otherwise alienate the assets, since the power
to do so must emanate from its Board of Directors. The
SAMD was not authorized by respondents Board to enter
into contracts of sale with third persons involving corporate
assets. There is absolutely nothing on record that
respondent authorized the SAMD, or made it appear to
petitioner that it represented itself as having such
authority.
Respondent reiterates that SAMD had informed
petitioner that its offer to repurchase had been approved by
the Board subject to the condition, among others, that the
selling price
463

VOL. 511, DECEMBER 20, 2006

Manila Metal Container Corporation vs. Philippine
National Bank

463

shall be the total banks claim as of documentation date x x

x payable in cash (P725,000.00 already deposited) within
60 days from notice of approval. A new Statement of
Account was attached therein indicating the total banks
claim to be P1,931,389.53 less deposit of P725,000.00, or
P1,206,389.00. Furthermore, while respondents Board of
Directors accepted petitioners offer to repurchase the
property, the acceptance was qualified, in that it required a
higher sale price and subject to specified terms and
conditions enumerated therein. This qualified acceptance
was in effect a counteroffer, necessitating petitioners
acceptance in return.
The Ruling of the Court
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 41
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 the42 thing and the cause which are to constitute the
contract. Once perfected, they bind other contracting
parties and the obligations arising therefrom have the form
of law between the parties and should be complied with in
good faith. The
_______________
41

NEW CIVIL CODE, Article 1305.

42

Gomez v. Court of Appeals, 395 Phil. 115, 125126 340 SCRA 720,

728 (2000).
464

464

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine

National Bank

parties are bound not only to the fulfillment of what has

been expressly stipulated but also to the consequences
which, according to their 43nature, may be in keeping with
good faith, usage and law.
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 44to pay therefor 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. As the45 Court ruled in Boston
Bank of the Philippines v. 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
46
perfected 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 one47party 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
48
binding juridical relation between the parties.
_______________
43

NEW CIVIL CODE, Article 1315.

44

NEW CIVIL CODE, Article 1458.

45

G.R. No. 158149, February 9, 2006, 482 SCRA 108.

46

Id., at p. 129.

47

Palattao v. Court of Appeals, 431 Phil. 438, 450 381 SCRA 681, 691

(2002).
48

Boston Bank of the Philippines v. Manalo, supra note 45, at p. 129.

465

VOL. 511, DECEMBER 20, 2006

465

Manila Metal Container Corporation vs. Philippine

National Bank
49

In San Miguel Properties Philippines, Inc. v. Huang,

the

49

In San Miguel Properties Philippines, Inc. v. Huang, the

Court ruled that the stages of a contract of sale are as
follows: (1) negotiation, covering the period from the time
the prospective contracting parties indicate interest in the
contract to the time the contract is perfected (2) perfection,
which takes place upon the concurrence of the essential
elements of the sale which are the meeting of the minds of
the parties as to the object of the contract and upon the
price and (3) consummation, which begins when the
parties perform their respective undertakings under the
contract of sale, culminating in the extinguishment thereof.
A negotiation is formally50 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 from51 the
proposal. In Adelfa Properties, Inc. v. Court of Appeals, the
Court ruled that:
x x x The rule is that except where a formal acceptance is so
required, although the acceptance must be affirmatively and
clearly made and must be evidenced by some acts or conduct
communicated to the offeror, it may be shown by acts, conduct, or
words of the accepting party that clearly manifest a present
intention or determination to accept the offer to buy or sell. Thus,
acceptance may be shown by the acts, conduct, or52 words of a party
recognizing the existence of the contract of sale.

A qualified acceptance or one that involves a new proposal

constitutes a counteroffer and a rejection of the original
offer.
_______________
49

391 Phil. 636, 645 336 SCRA 737, 744745 (2000).

50

NEW CIVIL CODE, Article 1319.

51

310 Phil. 623 240 SCRA 565 (1995).

52

Id., at p. 642 p. 580.

466

466

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine
National Bank

A counteroffer is considered in law, a rejection of the

original offer and an attempt to end 53the 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
54
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.
In this case, petitioner had until February 17, 1984
within which to redeem the property. However, since it
lacked the resources, it requested for more time to
redeem/repurchase the property under
such terms and
55
conditions agreed upon by the parties. The request, which
was made through a letter dated August 25, 1983, was
referred
to the respondents main branch for appropriate
56
action. Before respondent could act on the request,
petitioner again wrote respondent as follows:
1. Upon approval of our request, we will pay your
goodselves ONE HUNDRED & FIFTY THOUSAND
PESOS (P150,000.00)
2. Within six months from date of approval of our
request, we will pay another FOUR HUNDRED
FIFTY THOUSAND PESOS (P450,000.00) and
3. The remaining balance together with the interest
and other expenses that will be incurred will be
paid within the last six months
of the one year
57
grave period requested for.
When the petitioner was58 told that respondent did not allow
partial redemption, it sent a letter to respondents
_______________
53

Logan v. Philippine Acetylene Company, 33 Phil. 177, 183184 (1916).

54

ABSCBN Broadcasting Corporation v. Court of Appeals, G.R. No.

128690, July 21, 1999, 361 SCRA 499, 520.

55

Exhibit F, Rollo, p. 69.

56

Exhibit F1, Id., at p. 68.

57

Exhibit F2, Records, p. 27.

58

Exhibit F4, Rollo, p. 72.

467

VOL. 511, DECEMBER 20, 2006

467

Manila Metal Container Corporation vs. Philippine

National Bank
59

President reiterating its offer to purchase the property.

There was no response to petitioners letters dated
February 10 and 15, 1984.
The statement of account prepared by the SAMD stating
that the net claim of respondent as of June 25, 1984 was
P1,574,560.47 cannot be considered an unqualified
acceptance to petitioners offer to purchase the property.
The statement is but a computation of the amount which
petitioner was obliged to pay in case respondent would
later agree to sell the property, including interests,
advances on insurance premium, advances on realty taxes,
publication cost, registration expenses and miscellaneous
expenses.
There is no evidence that the SAMD was authorized by
respondents Board of Directors to accept petitioners offer
and sell the property for P1,574,560.47. Any acceptance by
the SAMD of petitioners offer would not bind respondent.
As this Court ruled in AF Realty
Development, Inc. vs.
60
Dieselman Freight Services, Inc.:
Section 23 of the Corporation Code expressly provides that the
corporate powers of all corporations shall be exercised by the
board of directors. Just as a natural person may authorize
another to do certain acts in his behalf, so may the board of
directors of a corporation validly delegate some of its functions to
individual officers or agents appointed by it. Thus, contracts or
acts of a corporation must be made either by the board of directors
or by a corporate agent duly authorized by the board. Absent such
valid delegation/authorization, the rule is that the declarations of
an individual director relating to the affairs of the corporation,
but not in the course of, or connected with the performance of
authorized duties of such director, are held not binding on the
corporation.

Thus, a corporation can only execute its powers and

transact its business through its Board of Directors and
through its
_______________
59

Exhibit F3, Id., at p. 71.

60

424 Phil. 446, 454 373 SCRA 385, 391 (2002).

468

468

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine
National Bank

officers and agents

when authorized by a board resolution
61
or its bylaws.
It appears that the SAMD had prepared a
recommendation for respondent to accept petitioners offer
to repurchase the property even beyond the oneyear
period it recommended that petitioner be allowed to
redeem the property and pay P1,574,560.00 as the
purchase price. Respondent later approved the
recommendation that the property be sold to petitioner.
But instead of the P1,574,560.47 recommended by the
SAMD and to which petitioner had previously conformed,
respondent set the purchase price at P2,660,000.00. In fine,
respondents acceptance of petitioners offer was qualified,
hence can be at most considered as a counteroffer. If
petitioner had accepted this counteroffer, a perfected
contract of sale would have arisen as it turns out, however,
petitioner merely sought to have the counteroffer
reconsidered. This request for reconsideration would later
be rejected by respondent.
We do not agree with petitioners contention that the
P725,000.00 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. The provision reads:
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.

This contention is likewise negated by the stipulation of

facts which the parties entered into in the trial court:
8. On June 8, 1984, the Special Assets Management Department
(SAMD) of PNB prepared an updated Statement of Account
showing MMCCs total liability to PNB as of June 25, 1984 to be
P1,574,560.47 and recommended this amount as the repurchase
price of the subject property.
_______________
61

Firme v. Bukal Enterprises and Development Corporation, G.R. No.

146608, October 23, 2003, 414 SCRA 190.

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VOL. 511, DECEMBER 20, 2006

469

Manila Metal Container Corporation vs. Philippine

National Bank
9. On June 25, 1984, MMCC paid P725,000.00 to PNB as deposit
to repurchase the property. The deposit of P725,000 was
accepted by PNB on the condition that the purchase
price is
62
still subject to the approval of the PNB Board.

Thus, the P725,000.00 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 P1,574,560.47. Unless and until
the respondent accepted the offer on these terms, no
perfected contract of sale would arise. Absent proof of the
concurrence of all the essential elements of a contract of
sale, the giving of earnest money cannot
establish the
63
existence of a perfected contract of sale.
It appears that, per its letter to petitioner dated June 4,
1985, the respondent had decided to accept the offer to
purchase the property for P1,931,389.53. However, this
amounted to an amendment of respondents qualified
acceptance, or an amended counteroffer, because while the
respondent lowered the purchase price, it still declared that
its acceptance was subject to the following terms and
conditions:
1. That the selling price shall be the total Banks
claim as of documentation date (pls. see attached
statement of account as of 53185), payable in cash
(P725,000.00 already deposited) within sixty (60)
days from notice of approval
2. The Bank sells only whatever rights, interests and
participation it may have in the property and you
are charged with full knowledge of the nature and
extent of said rights, interests and participation
and waive your right to warranty against eviction.
3. All taxes and other government imposts due or to
become due on the property, as well as expenses
including costs of documents and science stamps,
transfer fees, etc., to be incurred in con
_______________
62

Records, p. 258.

63

San Miguel Properties Philippines, Inc., v. Huang, supra note 52, at

p. 647 p. 746.
470

470

SUPREME COURT REPORTS ANNOTATED

Manila Metal Container Corporation vs. Philippine
National Bank

nection with the execution and registration of all

covering documents shall be borne by you
4. That you shall undertake at your own expense and
account the ejectment of the occupants of the
property subject of the sale, if there are any
5. That upon your failure to pay the balance of the
purchase price within sixty (60) days from receipt of
advice accepting your offer, your deposit shall be
forfeited and the Bank is thenceforth authorized to
sell the property to other interested parties.
6. That the sale shall be subject to such other terms
and conditions that the Legal Department
may
64
impose to protect the interest of the Bank.
It appears that although respondent requested petitioner to
conform to its amended counteroffer, petitioner refused
and instead requested respondent to reconsider its
amended counteroffer. Petitioners request was ultimately
rejected and respondent offered to refund its P725,000.00
deposit.
In sum, then, there was no perfected contract of sale
between petitioner and respondent over the subject
property.
IN LIGHT OF ALL THE FOREGOING, the petition is
DENIED. The assailed decision is AFFIRMED. Costs
against petitioner Manila Metal Container Corporation.
SO ORDERED.
YnaresSantiago (Working Chairperson), Austria
Martinez and ChicoNazario, JJ., concur.
Panganiban (C.J., Chairperson), Retired as of
December 7, 2006.
Petition denied, assailed decision affirmed.
Notes.An option contract is a contract separate from
and preparatory to a contract of sale which if perfected,

does not result in the perfection or consummation of the

sameonly
_______________
64

Records, pp. 3738.

471

VOL. 511, DECEMBER 20, 2006

471

Uriarte vs. People

when the option is exercised may a sale be perfected.

(Cavite Development Bank vs. Lim, 324 SCRA 346 [2000])
Earnest money is something of value to show that the
buyer was really in earnest, and given to the seller to bind
the bargain, and whenever earnest money is given in a
contract of sale, it is considered as part of the purchase
price and proof of the perfection of the contract. (Laforteza
vs. Machuca, 33 SCRA 643 [2000])
o0o

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