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Boston Bank of the Philippines (Bank of Commerce) vs Manalo, Jr.

GR. 158149, February 9,2006


Facts:
1967. Xavier Estate Inc. (XEI) through its general manager Ramos executed a Deed of Sale of Real
Estate of several lots including Block 2, lot 1 and 2 to Overseas Bank of Manila (OBM).
1972. XEI president hired Manalo’s company for a project. Manalo, instead of receiving the
project’s payment of P34,887.66, requested that it be used as down-payment for two lots in XEI’s
subdivision. Manalo chose Block 2, lot 1 and 2.
Through a letter dated August 22, 1972, XEI confirmed the reservation and pegged total price of
P348,060 with a 20% down-payment or P69,612 less the amount XEI owed Manalo. Due date of the
balance of the down-payment is December 31,1972 or within five days from receipt of notice of
resumption of sale. XEI allowed Manalo to build improvements.
Spouses Manalo were notified of the resumption of sale but did not give the balance of the down-
payment because XEI did not prepare a contract of conditional sale for the former to sign. Manalo received
letters showing the amount they owe plus interests starting from the date they took over the property.
1979, XEI was acquired by CBM. Register of Deeds were issued in their favor. CBM then filed a
complaint of unlawful detainer after Manalo failed to show the Contract to Sell between him and XEI.
CBM withdrew its complaint because of this issue regarding the contract to sell. Manalo filed a complaint
for specific performance.
The RTC held that the August 1972 letter agreement between XEI and Manalo had a complete
contract to sell; that XEI’s failure to notify of the resumption of its selling operations and to execute a
deed of conditional sale did not prevent their obligation to convey titles to the lots from acquiring binding
effect. The plaintiffs had a cause of action to compel the defendant to execute a deed of sale over the lots
in their favor after payment of the lot’s price amounting P940,000.
The CA sustained the RTC’s ruling but declared a different amount of P247,448.00 which was
payable in fixed amounts, inclusive of pre-computed interests, from delivery of the possession of the
property to the appellees on a monthly basis for 120 months, based on the deeds of conditional sale
executed by XEI in favor of other lot buyers.

Issue: Did the XEI and Manalo forge a perfect contract to sell over the property? Does Manalo have a
cause of action for specific performance?

Held:
No and None. For a perfected contract of sale or contract to sell to exist in law, there must be an
agreement of the parties, not only on the price of the property sold, but also on the manner the price is
to be paid by the vendee. Article 1458 of the NCC, in a contract of sale, whether absolute or conditional,
one of the contracting parties obliges himself to transfer the ownership of and deliver a determinate thing,
and the other to pay therefor a price certain in money or its equivalent. 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.
In this case, the terms have yet to be agreed upon on or before December 31, or even afterwards,
when the parties sign the corresponding contract of conditional sale. The term of payment (monthly,
quarterly, semi-annually, annually) for the price of the lot was not mentioned in the letter and therefore
not agreed upon. Determination of such is necessary when the contract to sell a property is by installment.
Absent such determination, there is no contract to sell.
If a material element of a contemplated contract is left for future negotiations, the same is too
indefinite to be enforceable. And when an essential element of a contract is reserved for future agreement
of the parties, no legal obligation arises until such future agreement is concluded. 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 are to make, the contract is incomplete and unenforceable because it lacks the
necessary qualities of definiteness, certainty, and mutuality.

There is no factual and legal basis for the CA ruling that, based on the terms of payment of the
balance of the purchase price of the lots under the contracts of conditional sale executed by XEI and the
other lot buyers, respondents were obliged to pay the P278,448.00 with pre-computed interest of 12%
per annum in 120-month installments.

The Court emphasized that it is not the province of a court to alter a contract by construction or
to make a new contract for the parties; its duty is confined to the interpretation of the one which they
have made for themselves, without regard to its wisdom or folly, as the court cannot supply material
stipulations or read into contract words which it does not contain.