G.R. No. 166862 December 20, 2006
MANILA METAL CONTAINER CORPORATION, petitioner, vs. PHILIPPINE NATIONAL BANK, respondent.

FACTS

Petitioner Manila Metal Container Corporation (MMCC) mortgaged its property to respondent Philippine National Bank (PNB) to secure loans. Upon MMCC’s default, PNB extrajudicially foreclosed the mortgage and acquired the property as the highest bidder at the auction sale. After the redemption period expired, MMCC negotiated to repurchase the property. PNB’s Special Assets Management Department (SAMD) recommended allowing the repurchase for P1,574,560.47, and MMCC made a P725,000.00 deposit, for which an official receipt was issued. However, PNB’s higher management later rejected the SAMD recommendation and demanded a higher purchase price of P2,660,000.00, which MMCC refused.
MMCC filed a complaint for specific performance, contending that PNB, through its SAMD, had already accepted its offer to repurchase at the lower price, perfected a contract of sale, and was thus bound to convey the property. PNB countered that no contract was perfected because its SAMD had no authority to bind the bank, and its Board of Directors did not approve the SAMD’s recommendation. The Regional Trial Court dismissed the complaint, a decision affirmed by the Court of Appeals.

ISSUE

Whether a contract of sale was perfected between MMCC and PNB for the repurchase of the foreclosed property at the price of P1,574,560.47.

RULING

No, a contract of sale was not perfected. A contract is perfected by mere consent, which requires a meeting of the minds upon the object certain and the price. The legal logic hinges on the principle of authority and the absence of a definitive acceptance. The SAMD’s recommendation was merely a preparatory step in the internal evaluation process; it was not a final and authoritative acceptance of MMCC’s offer. The issuance of an official receipt for the deposit did not signify perfection, as it was explicitly received as a “deposit to repurchase,” contingent on future approval.
Crucially, PNB’s higher management, which possessed the binding authority, expressly rejected the SAMD’s proposed price and made a counter-proposal for a higher amount. This counter-proposal operated as a rejection of MMCC’s original offer. MMCC’s failure to accept this new term meant no meeting of the minds was ever achieved on the essential element of price. Therefore, since all the elements of a consensual contract of sale—particularly the concurrence of offer and acceptance on a certain price—were not present, no enforceable contract was created. PNB could not be compelled to perform a non-existent obligation.