G.R. No.

154493             December 6, 2006 This is a deposit made to show the sincerity of my

purchase offer with the understanding that it shall be
REYNALDO VILLANUEVA, petitioner, returned without interest if my offer is not favorably
vs. considered or be forfeited if my offer is approved but I
PHILIPPINE NATIONAL BANK (PNB), respondent. fail/refuse to push through the purchase.13

DECISION Also, on July 24, 1990, P380,000.00 was debited from

Villanueva’s Savings Account No. 43612 and credited to
SAMD.14
AUSTRIA-MARTINEZ, J.:

On October 11, 1990, however, Guevara wrote Villanueva

The Petition for Review on Certiorari under Rule 45 before
that, upon orders of the PNB Board of Directors to conduct
this Court assails the January 29, 2002 Decision 1 and June
another appraisal and public bidding of Lot No. 19, SAMD is
27, 2002 Resolution2 of the Court of Appeals (CA) in CA-G.R.
deferring negotiations with him over said property and
CV No. 520083 which reversed and set aside the September
returning his deposit of P580,000.00.15 Undaunted, Villanueva
14, 1995 Decision4 of the Regional Trial Court, Branch 22,
attempted to deliver postdated checks covering the balance
General Santos City (RTC) in Civil Case No. 4553.
of the purchase price but PNB refused the same.
As culled from the records, the facts are as follows:
Hence, Villanueva filed with the RTC a Complaint 16 for
specific performance and damages against PNB. In its
The Special Assets Management Department (SAMD) of the September 14, 1995 Decision, the RTC granted the
Philippine National Bank (PNB) issued an advertisement for Complaint, thus:
the sale thru bidding of certain PNB properties in Calumpang,
General Santos City, including Lot No. 17, covered by TCT
WHEREFORE, judgment is rendered in favor of the
No. T-15042, consisting of 22,780 square meters, with an
plaintiff and against the defendant directing it to do
advertised floor price of P1,409,000.00, and Lot No. 19,
the following:
covered by TCT No. T-15036, consisting of 41,190 square
meters, with an advertised floor price
of P2,268,000.00.5 Bidding was subject to the following 1. To execute a deed of sale in favor of the plaintiff
conditions: 1) that cash bids be submitted not later than April over Lot 19 comprising 41,190 square meters
27, 1989; 2) that said bids be accompanied by a 10% deposit situated at Calumpang, General Santos City covered
in manager’s or cashier’s check; and 3) that all acceptable by TCT No. T-15036 after payment of the balance in
bids be subject to approval by PNB authorities. cash in the amount of P2,303,300.00;

In a June 28, 1990 letter6 to the Manager, PNB-General 2. To pay the plaintiff P1,000,000.00 as moral
Santos Branch, Reynaldo Villanueva (Villanueva) offered to damages; P500,000.00 as attorney’s fees, plus
purchase Lot Nos. 17 and 19 for P3,677,000.00. He also litigation expenses and costs of the suit.
manifested that he was depositing P400,000.00 to show his
good faith but with the understanding that said amount may SO ORDERED.17
be treated as part of the payment of the purchase price only
when his offer is accepted by PNB. At the bottom of said The RTC anchored its judgment on the finding that there
letter there appears an unsigned marginal note stating existed a perfected contract of sale between PNB and
that P400,000.00 was deposited into Villanueva’s account Villanueva. It found:
(Savings Account No. 43612) with PNB-General Santos
Branch. 7 The following facts are either admitted or undisputed:

PNB-General Santos Branch forwarded the June 28, 1990 xxx

letter of Villanueva to Ramon Guevara (Guevara), Vice
President, SAMD.8 On July 6, 1990, Guevara informed
Villanueva that only Lot No. 19 is available and that the The defendant through Vice-President Guevara
asking price therefor is P2,883,300.00.9 Guevara further negotiated with the plaintiff in connection with the
wrote: offer of the plaintiff to buy Lots 17 & 19. The offer of
plaintiff to buy, however, was accepted by the
defendant only insofar as Lot 19 is concerned as
If our quoted price is acceptable to you, please exemplified by its letter dated July 6, 1990 where the
submit a revised offer to purchase. Sale shall be plaintiff signified his concurrence after conferring with
subject to our Board of Director’s approval and to the defendant’s vice-president. The conformity of the
other terms and conditions imposed by the Bank on plaintiff was typewritten by the defendant’s own
sale of acquired assets. 10 (Emphasis ours) people where the plaintiff accepted the price
of P2,883,300.00. The defendant also issued a
Instead of submitting a revised offer, Villanueva merely receipt to the plaintiff on the same day when the
inserted at the bottom of Guevara’s letter a July 11, 1990 plaintiff paid the amount of P200,000.00 to complete
marginal note, which reads: the downpayment of P600,000.00 (Exhibit "F" &
Exhibit "I"). With this development, the plaintiff was
C O N F O R M E: also given the go signal by the defendant to improve
Lot 19 because it was already in effect sold to him
PRICE OF P2,883,300.00 (downpayment and because of that the defendant fenced the lot and
of  P600,000.00 and the balance payable in two (2) completed his two houses on the property.18
years at quarterly amortizations.) 11
The RTC also pointed out that Villanueva’s P580,000.00
Villanueva paid P200,000.00 to PNB which issued O.R. No. downpayment was actually in the nature of earnest money
16997 to acknowledge receipt of the "partial payment deposit acceptance of which by PNB signified that there was already
on offer to purchase."12 On the dorsal portion of Official a sale.19 The RTC further cited contemporaneous acts of PNB
Receipt No. 16997, Villanueva signed a typewritten note, purportedly indicating that, as early as July 25, 1990, it
stating: considered Lot 19 already sold, as shown by Guevara’s July
25, 1990 letter (Exh. "H")20 to another interested buyer.
PNB appealed to the CA which reversed and set aside the consideration embodied in said offer.25 While it is impossible
September 14, 1995 RTC Decision, thus: to expect the acceptance to echo every nuance of the offer, it
is imperative that it assents to those points in the offer which,
WHEREFORE, the appealed decision is REVERSED under the operative facts of each contract, are not only
and SET ASIDE and another rendered DISMISSING material but motivating as well. Anything short of that level of
the complaint. mutuality produces not a contract but a mere counter-offer
awaiting acceptance.26 More particularly on the matter of the
consideration of the contract, the offer and its acceptance
SO ORDERED.21
must be unanimous both on the rate of the payment and on
its term. An acceptance of an offer which agrees to the rate
According to the CA, there was no perfected contract of sale but varies the term is ineffective. 27
because the July 6, 1990 letter of Guevara constituted a
qualified acceptance of the June 28, 1990 offer of Villanueva,
To determine whether there was mutual consent between the
and to which Villanueva replied on July 11, 1990 with a
parties herein, it is necessary to retrace each offer and
modified offer. The CA held:
acceptance they made.
In the case at bench, consent, in respect to the price
Respondent began with an invitation to bid issued in April
and manner of its payment, is lacking. The record
1989 covering several of its acquired assets in Calumpang,
shows that appellant, thru Guevara’s July 6, 1990
General Santos City, including Lot No. 19 for which the floor
letter, made a qualified acceptance of appellee’s
price was P2,268,000.00. The offer was subject to the
letter-offer dated June 28, 1990 by imposing an
condition that sealed bids, accompanied by a 10% deposit in
asking price of P2,883,300.00 in cash for Lot 19. The
manager’s or cashier’s check, be submitted not later than 10
letter dated July 6, 1990 constituted a counter-offer
o’clock in the morning of April 27, 1989.
(Art. 1319, Civil Code), to which appellee made a
new proposal, i.e., to pay the amount
of P2,883,300.00 in staggered amounts, that On June 28, 1990, petitioner made an offer to buy Lot No. 17
is, P600,000.00 as downpayment and the balance and Lot No. 19 for an aggregate price of P3,677,000.00. It is
within two years in quarterly amortizations. noted that this offer exactly corresponded to the April 1989
invitation to bid issued by respondent in that the proposed
aggregate purchase price for Lot Nos. 17 and 19 matched the
A qualified acceptance, or one that involves a new
advertised floor prices for the same properties. However, it
proposal, constitutes a counter-offer and a rejection
cannot be said that the June 28, 1990 letter of petitioner was
of the original offer (Art. 1319, id.). Consequently,
an effective acceptance of the April 1989 invitation to bid for,
when something is desired which is not exactly what
by its express terms, said invitation lapsed on April 27,
is proposed in the offer, such acceptance is not
1989.28 More than that, the April 1989 invitation was subject
sufficient to generate consent because any
to the condition that all sealed bids submitted and accepted
modification or variation from the terms of the offer
be approved by respondent’s higher authorities.
annuls the offer (Tolentino, Commentaries and
Jurisprudence on the Civil Code of the Philippines,
6th ed., 1996, p. 450, cited in ABS-CBN Broadcasting Thus, the June 28, 1990 letter of petitioner was an offer to
Corporation v. Court of Appeals, et al., 301 SCRA buy independent of the April 1989 invitation to bid. It was a
572). definite offer as it identified with certainty the properties
sought to be purchased and fixed the contract price.
Appellee’s new proposal, which constitutes a counter-
offer, was not accepted by appellant, its board having However, respondent replied to the June 28, 1990 offer with a
decided to have Lot 19 reappraised and sold thru July 6, 1990 letter that only Lot No. 19 is available and that
public bidding. the price therefor is now P2,883,300.00. As the CA pointed
out, this reply was certainly not an acceptance of the June 28,
1990 offer but a mere counter-offer. It deviated from the
Moreover, it was clearly stated in Guevara’s July 6,
original offer on three material points: first, the object of the
1990 letter that "the sale shall be subject to our Board
proposed sale is now only Lot No. 19 rather than Lot Nos. 17
of Director’s approval and to other terms and
and 19; second, the area of the property to be sold is still
conditions imposed by the Bank on sale of acquired
41,190 sq. m but an 8,797-sq. m portion is now part of a
assets."22
public road; and third, the consideration is P2,883,300 for one
lot rather than P3,677,000.00 for two lots. More important,
Villanueva’s Motion for Reconsideration23 was denied by the this July 6, 1990 counter-offer imposed two conditions: one,
CA in its Resolution of June 27, 2002. that petitioner submit a revised offer to purchase based on
the quoted price; and two, that the sale of the property be
Petitioner Villanueva now assails before this Court the approved by the Board of Directors and subjected to other
January 29, 2002 Decision and June 27, 2002 Resolution of terms and conditions imposed by the Bank on the sale of
the CA. He assigns five issues which may be condensed into acquired assets.
two: first, whether a perfected contract of sale exists between
petitioner and respondent PNB; and second, whether the In reply to the July 6, 1990 counter-offer, petitioner signed his
conduct and actuation of respondent constitutes bad faith as July 11, 1990 conformity to the quoted price of P2,883,300.00
to entitle petitioner to moral and exemplary damages and but inserted the term "downpayment of P600,000.00 and the
attorney’s fees. balance payable in two years at quarterly amortization." The
CA viewed this July 11, 1990 conformity not as an
The Court sustains the CA on both issues. acceptance of the July 6, 1990 counter-offer but a further
counter-offer for, while petitioner accepted the P2,883,300.00
Contracts of sale are perfected by mutual consent whereby price for Lot No. 19, he qualified his acceptance by proposing
the seller obligates himself, for a price certain, to deliver and a two-year payment term.
transfer ownership of a specified thing or right to the buyer
over which the latter agrees.24 Mutual consent being a state of Petitioner does not directly impugn such reasoning of the CA.
mind, its existence may only be inferred from the confluence He merely questions it for taking up the issue of whether his
of two acts of the parties: an offer certain as to the object of July 11, 1990 conformity modified the July 6, 1990 counter-
the contract and its consideration, and an acceptance of the offer as this was allegedly never raised during the trial nor on
offer which is absolute in that it refers to the exact object and appeal.29
Such argument is not well taken. From beginning to end, with the payments he had advanced, his July 11, 1990
respondent denied that a contract of sale with petitioner was counter-offer was still subject to consideration by respondent.
ever perfected.30 Its defense was broad enough to
encompass every issue relating to the concurrence of the Not only that, in the same Exh. "2-a" as well as in his June
elements of contract, specifically on whether it consented to 28, 1990 offer, petitioner referred to his payments as mere
the object of the sale and its consideration. There was "deposits." Even O.R. No. 16997 refers to petitioner’s
nothing to prevent the CA from inquiring into the offers and payment as mere deposit. It is only in the debit notice issued
counter-offers of the parties to determine whether there was by PNB-General Santos Branch where petitioner’s payment is
indeed a perfected contract between them. referred to as "downpayment". But then, as we said, PNB-
General Santos Branch has no authority to bind respondent
Moreover, there is merit in the ruling of the CA that the July by its interpretation of the nature of the payment made by
11, 1990 marginal note was a further counter-offer which did petitioner.
not lead to the perfection of a contract of sale between the
parties. Petitioner’s own June 28, 1990 offer quoted the price In sum, the amounts paid by petitioner were not in the nature
of P3,677,000.00 for two lots but was silent on the term of of downpayment or earnest money but were mere deposits or
payment. Respondent’s July 6, 1990 counter-offer quoted the proof of his interest in the purchase of Lot No. 19.
price of P2,833,300.00 and was also silent on the term of Acceptance of said amounts by respondent does not
payment. Up to that point, the term or schedule of payment presuppose perfection of any contract.36
was not on the negotiation table. Thus, when petitioner
suddenly introduced a term of payment in his July 11, 1990 It must be noted that petitioner has expressly admitted that he
counter-offer, he interjected into the negotiations a new had withdrawn the entire amount of P580,000.00 deposit from
substantial matter on which the parties had no prior PNB-General Santos Branch.37
discussion and over which they must yet agree.31 Petitioner’s
July 11, 1990 counter-offer, therefore, did not usher the
parties beyond the negotiation stage of contract making With the foregoing disquisition, the Court foregoes resolution
towards its perfection. He made a counter-offer that required of the second issue as it is evident that respondent acted well
acceptance by respondent. within its rights when it rejected the last counter-offer of
petitioner.
As it were, respondent, through its Board of Directors, did not
accept this last counter-offer. As stated in its October 11, In fine, petitioner’s petition lacks merit.
1990 letter to petitioner, respondent ordered the reappraisal
of the property, in clear repudiation not only of the proposed WHEREFORE, the petition is DENIED. The Decision dated
price but also the term of payment thereof. January 29, 2002 and Resolution dated June 27, 2002 of the
Court of Appeals are AFFIRMED.
Petitioner insists, however, that the October 11, 1990
repudiation was belated as respondent had already agreed to No costs.
his July 11, 1990 counter-offer when it accepted his
"downpayment" or "earnest money" of P580,000.00.32 He SO ORDERED.
cites Article 1482 of the Civil Code where it says that
acceptance of "downpayment" or "earnest money" Panganiban, C.J. (Chairperson), Ynares-Santiago, Callejo,
presupposes the perfection of a contract. Sr., and Chico-Nazario, JJ., concur.

Not so. Acceptance of petitioner’s payments did not amount

to an implied acceptance of his last counter-offer.

To begin with, PNB-General Santos Branch, which accepted

petitioner’s P380,000.00 payment, and PNB-SAMD, which
accepted his P200,000.00 payment, had no authority to bind
respondent to a contract of sale with petitioner. 33 Petitioner is
well aware of this. To recall, petitioner sent his June 28, 1990
offer to PNB-General Santos Branch. Said branch did not act
on his offer except to endorse it to Guevarra. Thereafter,
petitioner transacted directly with Guevarra. Petitioner then
cannot pretend that PNB-General Santos Branch had
authority to accept his July 11, 1990 counter-offer by merely
accepting his P380,000.00 payment.

Neither did SAMD have authority to bind PNB. In its April

1989 invitation to bid, as well as its July 6, 1990 counter-offer,
SAMD was always careful to emphasize that whatever offer is
made and entertained will be subject to the approval of
respondent’s higher authorities. This is a reasonable
disclaimer considering the corporate nature of respondent. 34

Moreover, petitioner’s payment of P200,000.00 was with the

clear understanding that his July 11, 1990 counter-offer was
still subject to approval by respondent. This is borne out by
respondent’s Exhibits "2-a" and "2-b", which petitioner never
controverted, where it appears on the dorsal portion of O.R.
No. 16997 that petitioner acceded that the amount he paid
was a mere "x x x deposit made to show the sincerity of [his]
purchase offer with the understanding that it shall be returned
without interest if [his] offer is not favorably considered x x
x."35 This was a clear acknowledgment on his part that there
was yet no perfected contract with respondent and that even