Boston Bank v.

Manalo
G.R. No. 158149 February 9, 2006 J. Callejo, Sr.
petitioner Boston Bank of the Philippines (formerly Bank of Commerce)
respondents Perla P. Manalo, and Carlos Manalo, Jr.
summary XEI  OBM  CBM (renamed: Boston Bank)
F: GM Ramos of XEI contracted with Engr. Manalo for his services. They agreed that the
payment for such services would be used as downpayment for lots that the Manalo spouses
would buy from XEI. In XEI’s Aug. 22 letter, the reservation of the lots was confirmed.
Among the stipulations in the letter was the price of the lots but not the manner of payment
of the same. There was also a stipulation that a Contract of Conditional Sale would be
executed once XEI resumes its operations. The contract was never executed but the spouses
took possession and built their home on the lot. Eventually, the ownership of the lots was
transferred to CBM. CBM required the spouses to prove its claim over the land and
demanded payment of the price but the spouses refused to pay because the contract hadn’t
been executed yet. The spouses were sued and they presented as evidence 3 contracts that
XEI executed with other buyers and claimed that the manner of payment stipulated therein
applied to them as well. On the basis of this, the CA ruled in favor of the spouses.
R: The SC ruled that there was no contract of conditional sale because of the failure to
stipulate the manner of payment. The bare fact that other lot buyers were allowed to pay the
balance of the purchase price of lots purchased by them in 120 or 180 monthly installments doesn’t
constitute evidence that XEI also agreed to give the respondents the same mode and timeline of
payment of the P278.4k. The spouses failed to allege and prove in the TC, that as a matter of
business usage, habit or pattern of conduct, XEI granted all lot buyers the right to pay the
balance of the purchase price in installments of 120 months of fixed amounts with pre-
computed interests, and that XEI and the spouses had intended to adopt such terms of
payment relative to the sale of the 2 lots in question. The examples offered in evidence to
prove habit, or pattern of evidence must be numerous enough (dependent on adequacy of
sampling and uniformity of response or ratio of reaction to situations) to base on inference of
systematic conduct

facts of the case

Vendor Xavierville Estate, Inc. (XEI), through its General Manager Ramos, executed a Deed of Sale of Real
Estate over some residential lots (including Lot 1 and Lot 2 of Block 2) in the Xavierville Estate Subdivision in favor
of the Vendee Overseas Bank of Manila (OBM). This transaction was subject to the approval of the BoD of OBM and
was covered by real estate mortgages in favor of the Philippine National Bank (PNB) as security for its account
amounting to P5,187,000, and the Central Bank of the Philippines as security for advances amounting to
P22,185,193.94. Now, XEI’s president Ramos, Jr. contracted Engr. Manalo Jr.’s services of drilling deep water wells
and installing pumps. Manalo asked to buy property in Xavierville and offered as downpayment the P34.8k that
Ramos owed him for the services he rendered. Ramos agreed through a letter (aka. Feb. 8, 1972 letter) and the
Manalo spouses chose Lots 1 and 2 of Block 2. Ramos later confirmed the reservation of the lots through another
letter (aka. Aug, 22 letter) to Mrs. Manalo and provided the total purchase price of P348k, with a downpayment of
20% (P69.6k minus the P34.8k) payable as soon as XEI resumes its selling operations; the corresponding Contract of
Conditional Sale would then be signed on or before the same date. Mrs. Manalo conformed to the letter agreement.
The spouses took possession of the property, and constructed a house and a fence on the lots.

The spouses were then informed of the resumption of the selling operations of XEI but didn’t pay the
rest of the downpayment cos Ramos failed to prepare a contract of conditional sale and transmit the same to the
spouses for their signature. Because of this, XEI furnished them with a statement of their account and billed them
for unpaid interests. (essentially, Ramos wants the contract and XEI wants to be paid without issuing it) XEI turned
over its selling operations to OBM including the lots already contracted and those unsold. OBM warned Mr.
Manalo that putting up a business sign’s specifically prohibited by their contract of conditional sale. OBM was later
issued the TCTs over Lots 1 and 2. The Commercial Bank of Manila (CBM) acquired the Xavierville Estate from
OBM. CBM wrote to the president of Xavierville’s Homeowners Association acknowledging Manalo as a
homeowner in the subdivision. CBM then requested Mrs. Manalo to stop any ongoing construction on the property
since she had no permission to do the same. She agreed to have a conference with CBM officers where she
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informed them that her husband had a contract with OBM, thru XEI to purchase the property. She was asked to
prove her claim but she failed to send the promised documents supporting the same and no longer responded to
CBM’s demands. CBM then filed a complaint for unlawful detainer with MTC QC, alleging that the spouses had
been unlawfully occupying the property without its consent and that despite demand, they refused to vacate the
property.

*in the interim, the spouses offered to amicably settle the issue by paying the original price by XEI but the parties
failed to reach an agreement (lahat ng attempts nila nagfail even those after the case by the sps). CBM was later renamed
as Boston Bank. The Spouses then filed a complaint for specific performance and damages with the RTC QC.

Arguments of Manalo:
(1) always been ready, able and willing to pay the installments but no contract was forthcoming; (2) built their house
worth P2M in good faith; (3) that they informed CBM that they would abide by the orig tenor of the agreement and made
a tender of payment which was rejected; upon payment of the P313k, they were entitled to a DoAS covering the lots.
Argument of CBM:
no cause of action cos the Aug. 22, 1972 letter between XEI and Manalos wasn’t binding on it; there were no records as to
the Manalos’ rights to the said properties

Evidence by Sps Manalo:

separate Contracts of Conditional Sale between XEI and other buyers of lots to prove that XEI sold lots even after OBM
had acquired said lots
Evidence by CBM:
(1) Aug. 22, 1972 letter where XEI proposed to sell the lots subject to 2 suspensive conditions: (a) payment of
the DP’s balance; (b) execution of the corresponding contract of conditional sale  failure to pay led to OBM’s
refusal to execute the contract and caused the forfeiture of the DP; OBM considered the lots unsold cos the title
bore no annotation that they’d been sold.

RTC: in favor of the Manalos; Execute and deliver a DoAS to the sps after payment of P942k (balance of the purchase
price of the 2 lots based on current market value); Under the Aug. 22 letter, the parties had a complete contract to sell and
had already partially consummated the same; failure of defendant to notify of the resumption of its selling operations
didn’t prevent the obligation to convey such titles.

CA: affirmed with modification. P942k changed to P313k (that is, P278k when the P34.8k’s subtracted) + 12%
interest/annum. It adopted the payment by 120 monthly installments based on the deeds of conditional sale executed by XEI in
favor of other lot buyers. Absent a written notice of cancellation of the contract to sell from the bank or notarial demand as
required, the sps had at least a 60-day grace pd with which to pay the DP.

issue
(1) WoN the factual issues raised by the petitioner are proper – YES. Exception applies. The ruling of the CA is contrary to law
and isn’t supported by evidence.
(2) WoN petitioner or its predecessors-in-interest, the XEI or the OBM, as seller, and the respondents, as buyers, forged a
perfect contract to sell over the property - NO
(3) WoN petitioner is estopped from contending that no such contract was forged by the parties - NO
(4) WoN respondents has a cause of action against the petitioner for specific performance – NO. The failure to forge a
perfected contract to sell the 2 lots means that the spouses have no cause of action for specific performance against CBM.

ratio
CBM argued that for a perfected contract of sale or contract to sell to exist in law, there must be an agreement of the
parties, not only as to the price of the property sold, but also on the manner the price is to be paid by the vendee.
The Court agreed with such argument.

A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of
the contract and the price. From the averment of perfection, the parties are bound, not only to the fulfillment of
what has been expressly stipulated, but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law. On the other hand, when the contract of sale or to sell is not perfected, it
cannot, as an independent source of obligation, serve as a binding juridical relation between the parties. A
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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 a contract to sell property by installments, it’s not enough for the parties to agree on the price of the
property. The manner of payment of the price is also required in order for there to be a binding and enforceable
contract of sale. Disagreement on the manner of payment is tantamount to a failure to agree on the price. Even if the buyer
makes a downpayment or portion, such payment can’t be considered as sufficient proof of the perfection of any purchase and
sale between the parties.

As applied:
There’s no showing in the records of the sched of payment of the balance of the purchase price on the property
amounting to P278.4k. The parties confined themselves to agreeing on the price of the property (P348k), the
downpayment (P69.6k), and the crediting of the P34.8k owing from Ramos as part of the 20% downpayment. The
timeline for the payment of the balance of the DP was also agreed upon (on or before XEI resumed its selling
operations, on or before Dec. 31, 1972, or within 5 days from written notice of such resumption of selling
operations), as well as the incorporation of all the terms and conditions relating to the sale. Acc. to jurisprudence, if
a material element of a contemplated contract is left for future negotiations, the same is too indefinite to be
enforceable. So long as an essential element entering into the proposed obligation of either of the parties
remains to be determined by an agreement which they’re to make, the contract’s incomplete and unenforceable.
This is because such contract’s lacking in the necessary qualities of definiteness, certainty, and mutuality. In this
case, the parties agree that there had been no contract of conditional sale ever executed by XEI, OBM or CBM, as
vendor, and the spouses as vendees.

[MAIN]
The Court also rejected the contention of the spouses that the terms of payment in the conditional
contracts of sale of XEI and other buyers were to be incorporated in their own contract. It wasn’t alleged in the
complaint, nor did Mr. Manalo testify to that fact. Further, in the Aug. 22 letter, the spouses failed to adduce a shred
of evidence to prove that they were obliged to pay P278.4k monthly, semi-annually or annually. By the CA’s ruling,
an essential element to the letter agreement was supplied. Courts shouldn’t undertake to make a contract for the
parties, nor can it enforce one, the terms of which are in doubt.
The bare fact that other lot buyers were allowed to pay the balance of the purchase price of lots purchased by them in
120 or 180 monthly installments doesn’t constitute evidence that XEI also agreed to give the respondents the same mode and
timeline of payment of the P278.4k.
Under Sec. 34, Rule 130 RRoC, evidence that one did a certain thing at one time isn’t admissible to prove
that he did the same or similar thing at another time, although such evidence may be received to prove habit, usage,
pattern of conduct or the intent of the parties.
In this case however, the respondents failed to allege and prove in the TC, that as a matter of business usage,
habit or pattern of conduct, XEI granted all lot buyers the right to pay the balance of the purchase price in
installments of 120 months of fixed amounts with pre-computed interests, and that XEI and the spouses had
intended to adopt such terms of payment relative to the sale of the 2 lots in question. The reason why the spouses
presented the 3 contracts of conditional sale was to prove that XEI sold the lots as OBM’s sales agent even after
the latter had acquired the same. Such evidence wasn’t presented to prove usage, habit or pattern of conduct on
the part of XEI to require all lot buyers in the subdivision to pay the balance of the purchase price of said lots in
120 months. Habit, custom, usage or pattern of conduct must be proved like any other facts. The offering party
must allege and prove specific, repetitive conduct that might constitute evidence of habit. The examples offered in
evidence to prove habit, or pattern of evidence must be numerous enough (dependent on adequacy of sampling and
uniformity of response or ratio of reaction to situations) to base on inference of systematic conduct. Mere similarity
of contracts does not present the kind of sufficiently similar circumstances to outweigh the danger of prejudice and
confusion.