G.R. No. 166862, December 20, 2006
Topics: contract of sale; perfection
Summary: Petitioner mortgaged a parcel of land to obtain a loan. Upon default, the mortgage was foreclosed, and the land sold at auction. Petitioner deposited P725,000.00 as a “deposit to repurchase” along with the offer to repurchase on installments.
Doctrines: A qualified acceptance or one that involves a new proposal constitutes a counter-offer and a rejection of the original offer. A counter-offer is considered, in law, a rejection of the original offer and an attempt to end the negotiation between the parties on a different basis.
Facts:
Petitioner owned an 8,015 square meter parcel of land located in Mandaluyong, Metro Manila.
To secure a P900,000.00 loan it had obtained from respondent Philippine National Bank (PNB), petitioner executed a real estate mortgage over the lot. Respondent PNB later granted the petitioner a new credit accommodation of P1,000,000.00.
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 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. After due notice and publication, the property was sold at public auction on September 28, 1982, where respondent PNB was declared the 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 extension of time to redeem/repurchase the property.
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 an installment basis. It reiterated its request to repurchase the property on installment. Meanwhile, some PNB Pasay City Branch personnel informed the petitioner that as a matter of policy, the bank does not accept “partial redemption.”
Since petitioner failed to redeem the property, the Register of Deeds canceled TCT No. 32098 on June 1, 1984, and issued a new title in favor of respondent PNB. Petitioner’s offers had not yet been acted upon by respondent PNB.
When apprised of the statement of account, petitioner remitted P725,000.00 to respondent PNB as “deposit to repurchase,” and Official Receipt No. 978191 was issued to it.
Meanwhile, 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 the petitioner that it was rejecting the offer and the recommendation of the SAMD. It was suggested that the petitioner purchase the property for P2,660,000.00, its minimum market value. Respondent PNB gave the petitioner until December 15, 1984, to act on the proposal; otherwise, its P725,000.00 deposit would be returned, and the property would be sold to other interested buyers.
Petitioner, however, did not agree to respondent PNB’s 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 the petitioner purchase the property for P2,660,000.00. PNB again informed petitioner that it would return the deposit should petitioner desire to 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 SAMD’s 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 on the position.
On June 4, 1985, respondent PNB informed petitioner that the PNB Board of Directors had accepted petitioner’s offer to purchase the property, but for P1,931,389.53 in cash less the P725,000.00 already deposited with it.
Petitioner rejected respondent’s 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 down payment had been accepted, respondent PNB was proscribed from increasing the purchase price of the property. Petitioner averred that it had a net balance payable in the amount of, P643,452.34. Respondent PNB, however, rejected petitioner’s offer to pay the balance of, P643,452.34 in a letter dated August 1, 1989.
Issue
Whether the petitioner and respondent PNB had entered into a perfected contract for petitioner to repurchase the property from respondent.
Ruling
NO. There was no perfected contract of sale between petitioner and respondent over the subject property.
A qualified acceptance or one that involves a new proposal constitutes a counter-offer and a rejection of the original offer. A counter-offer is considered, in law, a rejection of the original offer and an attempt to end the negotiation between the parties on a different basis.
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 conditions agreed upon by the parties. Before respondent could act on the request, the petitioner again wrote respondent requesting to pay on an installment basis.
When the petitioner was told that respondent did not allow “partial redemption,” it sent a letter to respondent’s President reiterating its offer to purchase the property.
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 petitioner’s 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.
There is no evidence that the SAMD was authorized by the respondent’s Board of Directors to accept the petitioner’s offer and sell the property for P1,574,560.47. Any acceptance by the SAMD of the petitioner’s offer would not bind the respondent.
Regarding the deposit, the P725,000.00 was merely a deposit to be applied as part of the purchase price of the property, if respondent would approve the recommendation of SAMD for respondent to accept petitioner’s 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 existence of a perfected contract of sale.
It appears that although respondent requested petitioner to conform to its amended counter-offer, petitioner refused and instead requested respondent to reconsider its amended counter-offer. Petitioner’s 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.