Boston Bank of Philippines v. Manalo
REITERATIONFacts
The Antecedents: Xavierville Estate, Inc. (XEI) owned a subdivision. OBM purchased lots from XEI, with XEI continuing to sell lots as OBM's agent. Spouses Manalo, through a letter agreement with XEI (represented by Emerito Ramos, Jr.), agreed to purchase two lots. The agreement pegged the price per square meter, specified a down payment, and credited a debt owed by Ramos to Manalo as part of the down payment. The spouses took possession, constructed a house, and fenced the lots. They were notified of the resumption of selling operations but did not pay the balance of the down payment because XEI failed to provide a contract of conditional sale. XEI and later OBM/CBM/Boston Bank demanded payment and removal of a business sign. Titles to the lots were issued in OBM's name. CBM/Boston Bank filed an unlawful detainer case against the spouses. The spouses filed a complaint for specific performance and damages, alleging readiness to pay the balance and good faith in constructing their house. They claimed their tender of payment was rejected. Procedural History: The RTC ruled in favor of the spouses, ordering the bank to execute a Deed of Absolute Sale upon payment and awarding damages and attorney's fees. The CA affirmed the RTC decision with modification, changing the amount payable to "₱313,172.34 plus interest thereon at the rate of 12% per annum from September 1, 1972 until fully paid" and deleting the award of damages and attorney's fees. The CA found a perfected contract to sell but noted the balance was payable in installments based on other contracts. The Petition: Boston Bank (petitioner) assailed the CA's ruling, arguing that no perfected contract to sell existed due to the lack of agreement on the manner of payment and other terms. Petitioner contended that the CA erred in applying Republic Act No. 6552 and in considering its ejectment complaint as a demand for rescission. Respondents argued that agreement on the price is sufficient for a perfected contract to sell, and the manner of payment can be inferred from other contracts or is payable on demand.
Issue(s)
Whether the factual issues raised by the petitioner are proper for a petition for review on certiorari. Whether a perfected contract to sell was forged between the parties. Whether the petitioner is estopped from contending that no such contract was forged. Whether the respondents have a cause of action against the petitioner for specific performance.
Ruling
The petition is GRANTED. The Decision of the Court of Appeals is REVERSED and SET ASIDE. The Regional Trial Court of Quezon City, Branch 98 is ordered to dismiss the complaint. Costs against the Respondents.
Ratio Decidendi
On the propriety of factual issues: The Court held that while generally it does not resolve factual issues, it may consider them if there is plain error, if necessary for substantial justice, or if closely related to issues already raised and necessary for a complete resolution. The issue of whether a contract to sell was perfected was raised by the parties and decided by the lower courts, thus allowing the Supreme Court to review it. On the existence of a perfected contract to sell: The Court ruled that for a perfected contract of sale or contract to sell to exist, there must be an agreement on the price AND the manner of payment. The August 22, 1972 letter agreement only specified the price, down payment, and the crediting of Ramos' debt. It did not specify the manner of payment for the balance of the down payment or the 80% balance of the purchase price. The parties agreed that the terms would be incorporated in a future "corresponding contract of conditional sale," but this contract was never executed, and no agreement was reached on the specific terms of payment. Therefore, no perfected contract to sell was forged. On estoppel: The Court found that the petitioner was not estopped from asserting that no perfected contract was forged. While the petitioner's predecessor-in-interest, XEI, had previously indicated in a letter that the property was purchased on an "installment basis," this statement lacked specificity regarding the amount, frequency, or terms of such installments. The Court emphasized that the parties themselves admitted that no contract of conditional sale was ever executed, and the issue of whether a contract was perfected was central to the case from the trial court level. On the cause of action for specific performance: Since no perfected contract to sell was established, the respondents failed to establish a cause of action for specific performance. Republic Act No. 6552, which provides remedies for purchasers in case of default, applies only to perfected contracts to sell. As there was no perfected contract, the respondents could not compel the petitioner to execute a Deed of Absolute Sale. The Court noted that the respondents were in possession without paying the balance of the down payment or the purchase price, while XEI and OBM failed to transmit the contract of conditional sale. However, the respondents could have consigned the payment and filed an action to compel the execution of the contract if one had been perfected.
Main Doctrine
For a perfected contract of sale or contract to sell to exist, there must be an agreement of the parties not only on the price of the property but also on the manner of its payment. A disagreement on the manner of payment is tantamount to a failure to agree on the price, rendering the contract incomplete and unenforceable.