Manila Metal Container Corporation vs Philippine National Bank [GR No.

166862, December 20, 2006]

Callejo, Sr., J.:

Facts: Petitioner was the owner of 8,015 square meters of parcel of land located in Mandaluyong City, Metro Manila. To secure a P900,000.00 loan it had obtained from respondent Philippine National Bank, petitioner executed a real estate mortgage over the lot. Respondent PNB later granted petitioner a new credit accommodation. On August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of the real estate mortgage and sought to have the property sold at public auction. After due notice and publication, the property was sold at public action where respondent PNB was declared the winning bidder. Petitioner sent a letter to PNB, requesting it to be granted an extension of time to redeem/repurchase the property. Some PNB personnel informed that as a matter of policy, the bank does not accept partial redemption. Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 and issued a new title in favor of PNB. Meanwhile, the Special Asset Management Department (SAMD) had prepared a statement of account of petitioners obligation. It also recommended the management of PNB to allow petitioner to repurchase the property for P1,574,560.oo. PNB rejected the offer and recommendation of SAMD. It instead suggested to petitioner to purchase the property for P2,660,000.00, in its minimum market value. Petitioner declared that it had already agreed to SAMDs offer to purchase for P1,574,560.47 and deposited a P725,000.00. Issue: Whether or not petitioner and respondent PNB had entered into a perfected contract for petitioner to repurchase the property for respondent.

Ruling: The SC affirmed the ruling of the appellate court that there was no perfected contact of sale between the parties. A contract is meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. Under 1818 of the Civil Code, there is no contract unless the following requisites concur: 1. Consent of the contracting parties; 2. Objection certain which is the subject matter of the contract; 3. Cause of the obligation which is established. Contract is perfected by mere consent which is manifested by the meeting of the offer and the acceptance upon the thing and causes which are to constitute the contract. Once perfected, the bind

between other contracting parties and the obligations arising therefrom have the form of law between the parties and should be complied in good faith. The absence of any essential element will negate the existence of a perfected contract of sale.

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