Boston Bank of the Phil. vs. Manalo, GR 158149, Feb. 9, 2006 Dot!ine" ● It is is not not enou enough gh for for the the par parti ties es to to agre agree e on the the pri price ce of of the the prop proper erty ty.. The The par parti ties es mus mustt also also agree on the manner of payment of the price of the property to give rise to a binding and enforceable contract of sale or contract to sell. This is so because the agreement as to the manner of payment goes into the price, such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. ● When When an ess essent entia iall elem elemen entt of a cont contra ract ct is is rese reserv rved ed for for fut futur ure e agre agreem ement ent of the the par parti ties es,, no legal obligation arises until such future agreement is concluded. Short Facts: Sps Manalo are purported buyers of lots sold by !"M #initial ban$%. In a letter&agreement, the total purchase price and '( do)npayment )as agreed upon. Spouses Manalo began construction in the lot. When rights to lots )as ac*uired by "oston ban$ from !"M, "oston "an$ tried to stop construction stating that the spouses did not have permission, stating that there )as no valid +ontract&to&Sell +ontract&to&Sell since the manner of payment of the '( balance )as not agreed upon, therefore the -letter&agreement )as not binding contract. Fats" /. 0aviervil 0avierville le 1state, 1state, Inc. #01I% #01I% sold to !"M #initial #initial ban$&buyer ban$&buyer%% some residential residential lots in 0aviervi 0avierville lle subdivision. 01I became agent of the ban$, and continued selling the residential lots. . +arlos +arlos Manalo, Manalo, 2r. proposed proposed to 01I, 01I, through through its 3resident 3resident 1merito 1merito 4amos#4a 4amos#4amos%, mos%, that he )ill purchase t)o lots in the subdivision and offered as part of the do)npayment the 356,7.88 that 4amos o)ed him. 01I,through 4amos, agreed. 5. In a lette!#a$!ee%ent &ate& '($(st 22, 19)2 to 19)2 to 3erla Manalo #+arlos9 )ife%, 4amos confirmed the reservation of the lots. In the letter he also pegged the price of the lots at 356,'8' )ith a '( do)n payment of the purchase price amounting to 38,8/.'' #less the 356,7.88 o)ing from 4amos%, payable as soon as 01I resumes its selling operations ; the corresponding +ontract of +onditional Sale )ould then be signed on or before the same date. 3erla Manalo conformed to the letter agreement. 6. The spouses constructed a house on the property. They )ere notified of 01I9s resumption of selling operations but they did not pay the balance of the do)npayment because 01I failed to give them a contract of conditional sale. <. 01I turned over its selling operations to !"M. Then, +"M #later renamed as "oston "an$% ac*uired the 0avierville 1state from !"M. 8. +"M="oston "an$ re*uested 3erla Manalo to stop any on&going construction on the property since she had no permission for such construction. 3erla informed them that her husband had a contract )ith !"M, through 01I, to purchase the property. She promised to send +"M the documents but she failed to do so. 8. The spouses filed a complaint for damages and specific performance against ban$ to obtain contract. The spouses alleged that upon their partial payment of the do)npayment, they )ere entitled to the e>ecution and delivery of a ?eed of @bsolute Sale covering the subAect lots. 7. 4T+ 4T+ ruled ruled in favor favor of spouses spouses and ordere ordered d deliv delivery ery of ?eed ?eed of Sale Sale of lots, lots, stati stating ng that that letter letter agreement )as a valid +TS. +@ upheld ruling of 4T+ *ss(e" W!B letter agreement )as a valid contract to sell #+TS%C & B!. +el&" B!. +ontract is unenforceable because manner of payment of '( balance has yet to be agreed upon. ● For a per perfect fecte ed cont contra rac ct of sal sale or cont contrract act to sell sell to to e>i e>ist in in la) la), ther there e mus 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. ● 3ric 3rice e is an esse essent ntia iall elem elemen entt in the the forma formati tion on of of a bind bindin ing g and enf enfor orce ceab able le con contr trac actt of sale. In a contract to sell property by installments, it is not enough that the parties agree on the price as )ell as the amount of do)npayment. The parties must, li$e)ise, agree on the manner of payment of the balance of the purchase price and on the other terms and conditions relative to the sale. 1ven if the buyer ma$es a do)npayment or portion thereof, such payment cannot be considered as sufficient proof of the perfection of any purchase and sale bet)een the parties.
D In this case, there is no sho)ing that there )as a schedule of payment of the balance of the purchase price. In the letter agreements, parties confined themselves to agreeing on the price of the property, the '( do)npayment, and credited respondents for the amount o)ned by 4amos as part of the '( do)npayment. Eo)ever, the determination of the terms of payment of the '( "@@B+1 had yet to be agreed upon on or before ?ecember 5/, /7, or even after)ards, )hen the parties sign the corresponding contract of conditional sale. ● 2urisprudence has ruled that if a material element of a contemplated contract is left for future negotiations, the same is too indefinite to be enforceable. @nd )hen an essential element of a contract is reserved for future agreement of the parties, no legal obligation arises until such future agreement is concluded. ● 4espondents failed and refused to pay the balance of the do)npayment and of the purchase price of the property amounting to 37,66.'' despite notice to them of the resumption by 01I of its selling operations. !n the other hand, 01I and !"M failed and refused to transmit a contract of conditional sale to the respondents. The respondent&spouses could have at least consigned the balance of the do)npayment after notice of the resumption of the selling operations of 01I and filed an action to compel 01I or !"M to transmit to them the said contract; ho)ever, they failed to do so. ● @s a conse*uence, respondents and 01I #or !"M for that matter% failed to forge a perfected contract to sell the t)o lots; hence, respondents have no cause of action for specific performance against petitioner. Republic Act No. 6552 applies only to a perfected contract to sell and not to a contract with no binding and enforceable effect . ● 3etition is G4@BT1?. 4T+ and +@ decisions reversed and set aside.
