Ignacio v. Home Bankers Savings and Trust Company
REITERATIONFacts
The Antecedents: In August 1981, Fausto C. Ignacio mortgaged two parcels of land to Home Savings Bank and Trust Company (predecessor of respondent Home Bankers Savings and Trust Company) as security for a P500,000.00 loan. Upon default, the bank foreclosed the mortgage, and at the foreclosure sale, the bank was the highest bidder. After the redemption period expired, title to the properties consolidated in favor of the bank. Subsequently, the bank sold portions of these properties to various third parties, including respondents Spouses Phillip and Thelma Rodriguez and the Zuñiga siblings. Procedural History: Petitioner Fausto C. Ignacio filed an action for specific performance and damages against respondent bank, seeking reconveyance of the properties upon payment of the balance of the repurchase price. The Regional Trial Court (RTC) ruled in favor of the petitioner, declaring the deeds of sale to the intervenors void and ordering the bank to refund the intervenors and reconvey the properties to the petitioner. The Court of Appeals (CA) reversed the RTC's decision, holding that no repurchase contract was perfected and that the bank acted within its rights in selling the properties. The CA found that petitioner acted as a broker in the sale of the foreclosed properties and that the intervenors were good faith purchasers. Petitioner's motion for reconsideration was denied. The Petition: The petitioners, heirs of Fausto C. Ignacio, filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court. They assail the CA's decision and resolution, arguing that the CA committed grave abuse of discretion in reversing the RTC's findings that a perfected contract to repurchase existed, that petitioner did not act as a broker, that the respondent bank had no right to dispose of the properties, and that the respondents-intervenors were not innocent purchasers for value. The core issue presented to the Supreme Court is whether a contract for the repurchase of the foreclosed properties was perfected between the petitioner and the respondent bank.
Issue(s)
Whether a perfected contract of repurchase was formed between the petitioner and the respondent bank. Whether the Court of Appeals committed grave abuse of discretion in reversing the findings of the trial court regarding the authority of bank officers, the nature of petitioner's role, and the intervenors' status.
Ruling
The petition is denied. The Decision of the Court of Appeals is affirmed. The Court sustained the CA's finding that no perfected contract of repurchase was entered into between the petitioner and the respondent bank.
Ratio Decidendi
On the existence of a perfected contract of repurchase: The Court affirmed the Court of Appeals' ruling that no perfected contract of repurchase was formed. Contracts are perfected by the meeting of the offer and acceptance. According to Article 1319 of the Civil Code, consent is manifested by the meeting of the offer and acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain, and the acceptance must be absolute. A qualified acceptance constitutes a counter-offer, which is a rejection of the original offer. In this case, the petitioner's handwritten notations on the March 22, 1984 letter from UPI President Rita B. Manuel modified the terms of the offer, including the selling price and the payment schedule. Specifically, the petitioner proposed a repurchase price of ₱900,000.00 instead of ₱950,000.00 and altered the installment payments, making the balance payable "Depending on financial position." This qualified acceptance was considered a counter-offer by the CA, which required acceptance by the respondent bank. However, there was no evidence of any written conformity by the respondent bank's authorized officers to this counter-proposal. The Court reiterated that an acceptance must be identical in all respects with that of the offer to produce consent. A variation from the terms of the offer annuls the offer. Therefore, the petitioner's modified terms did not constitute an absolute acceptance, and no contract was perfected. On the authority of bank officers and corporate powers, the petitioner's role, and the intervenors' status: The Court also upheld the CA's finding that even if there were verbal discussions between the petitioner and bank representatives (Mr. Lazaro and Mr. Fajardo), these did not bind the respondent bank. Section 23 of the Corporation Code provides that corporate powers shall be exercised by the board of directors. While the board may delegate functions to officers or agents, there was no evidence that Mr. Lazaro or Mr. Fajardo were authorized by the board to accept the petitioner's counter-proposal. The Court cited AF Realty & Development, Inc. v. Dieselman Freight Services, Co., stating that declarations of an individual director or officer not in the course of authorized duties do not bind the corporation. Thus, without proper authorization from the board, any alleged verbal agreement on modified terms was not binding on the respondent bank. The Court found it implausible that a banking institution and a lawyer would not formalize such a significant agreement in writing, especially with an open-ended payment term dependent on the petitioner's financial position, which is contrary to normal business practices of a financial institution. The CA correctly concluded that the receipts presented by the petitioner were not payments for the repurchase price but remittances from the buyers of the foreclosed properties. The CA noted that two receipts were issued to actual vendees, and the petitioner acted merely as a broker or middleman in these sales transactions. Since no repurchase contract was perfected, the sales made by the respondent bank to the intervenors were valid. The CA's finding that the intervenors were purchasers in good faith without notice of the petitioner's claim was rendered of no consequence because the underlying transaction (repurchase agreement) did not exist.
Main Doctrine
A contract of repurchase is perfected by the meeting of the offer and acceptance. A qualified acceptance, which modifies the terms of the offer, constitutes a counter-offer and is not sufficient to generate consent that would perfect a contract. Furthermore, corporate powers must be exercised by the board of directors or by authorized agents, and declarations of individual officers not connected with authorized duties do not bind the corporation.