G.R. No. 42780 - Manila Gas Corp. vs. Collector of Internal Revenue

Two docket numbers (G.R. No. 144661 and G.R. No. 144797) initially appeared as separate cases but were later found to address the same subject matter.
The petitions originated from a suit for breach of contract and/or specific performance filed by the Spouses Francisco Ong and Leticia Ong against the Development Bank of the Philippines (DBP), seeking enforcement of an alleged contract of sale of a foreclosed property.
The dispute was reviewed at several levels: an initial decision by the Regional Trial Court (RTC) at Cagayan de Oro City, a subsequent reversal on motion for reconsideration by the RTC, affirmation in toto by the Court of Appeals, and ultimately a petition for review on certiorari before the Supreme Court.

The disputed property was a foreclosed asset originally owned by Enrique Abada (identified by Transfer Certificate of Title No. T-4786) and located at Corrales Extension, Cagayan de Oro City.

On May 25, 1988, respondent Francisco Ong, with the conformity of his wife Leticia Ong, submitted a written offer to purchase the property through the bank’s Cagayan de Oro City branch.
The offer specified:

ii. Downpayment: ₱14,000.00 iii. Balance: ₱122,000.00, payable upon ejection of the occupants.

The offer explicitly stated that the deposit did not bind the bank until approval was received from its higher authorities.

The offer was “noted” by Jose Z. Lagrito, the branch head, and an official receipt (O.R. No. 3081947) was issued for the ₱14,000.00 deposit.
A letter dated October 21, 1988, communicated to the respondents that the bank had received a more advantageous offer from a third-party buyer and provided a three-day period for the respondents to match that offer.
Respondents submitted a matching written offer on October 28, 1988, agreeing to assume the responsibility for ejecting any present occupants at their own expense.
A conference on April 7, 1989, between the respondents (and their counsel) with bank representatives clarified why the sale could not be immediately awarded to them.
On September 6, 1990, respondents were informed that the property would instead be offered for public bidding, which propelled them to file the complaint for breach of contract and specific performance.

Respondents relied primarily on the testimony of Francisco Ong and documentary evidence.

Ong testified that he and his wife had been assured by bank personnel—specifically, bank clerk Roy Palasan—that the branch manager had consented to the sale of the property to them.
The respondents’ written offers and accompanying documents consistently indicated that the ₱14,000.00 was a deposit subject only to the approval of higher bank authorities.

Petitioner (DBP) did not present any significant evidence to rebut the clear testimony of the respondents, relying instead on its documentary exhibits and its earlier representations during the pleadings stage.

The trial court initially ruled in favor of the petitioner, dismissing the complaint on the ground that no perfected contract of sale existed.
Upon a motion for reconsideration by the respondents, the trial court reversed its earlier decision and subsequently rendered a judgment in their favor, ordering:

The Court of Appeals affirmed the trial court’s judgment in toto, basing its conclusion on the respondents’ unrebutted oral testimony and the perceived actions of bank personnel.

Whether a perfected contract of sale was established between the Development Bank of the Philippines and the respondents.

Did the actions taken by bank personnel—specifically, the “noting” of the respondents’ offer by the branch manager and the communication by bank clerk Roy Palasan—constitute an acceptance sufficient to bind the bank?
Can parol evidence be legitimately introduced to establish a meeting of minds or the perfection of the contract despite the absence of a fully executed written agreement?

The Authority of Bank Personnel and the Implications for Contract Perfection

Whether the apparent representations made by a mere bank clerk (Roy Palasan) could effectively bind the petitioner in the absence of express approval or board resolution by a duly authorized officer.
Whether the encashment of the check representing the ₱14,000.00 deposit should be interpreted as evidence of acceptance and, thus, the formation of a perfected contract.

To what extent does the doctrine of apparent authority obligate the petitioner to honor the representations made by its officers or agents?
Whether the petitioner may be estopped from denying the existence of a perfected contract based solely on the actions of a non-authorized officer.