BANK OF COMMERCE VS MANALO

FACTS:
The Xavierville Estate, Inc. was the owner of parcels of land in Quezon City, known as the
Xavierville Estate Subdivision, with an area of 42 hectares. XEI caused the subdivision of the property
into residential lots, which was then offered for sale to individual lot buyers.
Sometime in 1972, then XEI president Emerito Ramos, Jr. contracted the services of Engr.
Carlos Manalo, Jr. who was in business of drilling deep water wells and installing pumps under the
business name Hurricane Commercial, Inc. For P34,887.66, Manalo, Jr. installed a water pump at
Ramos residence at the corner of Aurora Boulevard and Katipunan Avenue, Quezon City. Manalo, Jr.
then proposed to XEI, through Ramos, to purchase a lot in the Xavierville subdivision, and offered as
part of the downpayment the P34,887.66 Ramos owed him. XEI, through Ramos, agreed. In a letter
dated February 8, 1972, Ramos requested Manalo, Jr. to choose which lots he wanted to buy so that
the price of the lots and the terms of payment could be fixed and incorporated in the conditional sale.
Manalo, Jr. met with Ramos and informed him that he and his wife Perla had chosen Lots 1 and 2 of
Block 2 with a total area of 1,740.3 square meters.
In a letter dated August 22, 1972 to Perla Manalo, Ramos confirmed the reservation of the
lots. He also pegged the price of the lots at P200.00 per square meter, or a total of P348,060.00, with
a 20% down payment of the purchase price amounting to P69,612.00 less the P34,887.66 owing from
Ramos, payable on or before December 31, 1972; the corresponding Contract of Conditional Sale
would then be signed on or before the same date, but if the selling operations of XEI resumed after
December 31, 1972, the balance of the downpayment would fall due then, and the spouses would
sign the aforesaid contract within 5 days from receipt of the notice of resumption of such selling
operations. It was also stated in the letter that, in the meantime, the spouses may introduce
improvements thereon subject to the rules and regulations imposed by XEI in the subdivision. Perla
Manalo conformed to the letter agreement.
The spouses Manalo took possession of the property on September 2, 1972, constructed a
house thereon, and installed a fence around the perimeter of the lots.
The spouses Manalo were notified of the resumption of the selling operations of XEI.
However, they did not pay the balance of the downpayment on the lots because Ramos failed to
prepare a contract of conditional sale and transmit the same to Manalo for their signature . On August
14, 1973, Perla Manalo went to the XEI office and requested that the payment of the amount
representing the balance of the downpayment be deferred, which, however, XEI rejected. On August
10, 1973, XEI furnished her with a statement of their account as of July 31, 1973, showing that they
had a balance of P34,724.34 on the downpayment of the two lots after deducting the account of
Ramos, plus P3,819.68 interest thereon from September 1, 1972 to July 31, 1973, and that the
interests on the unpaid balance of the purchase price of P278,448.00 from September 1, 1972 to July
31, 1973 amounted to P30,629.28. The spouses were informed that they were being billed for said
unpaid interests.
Subsequently, XEI turned over its selling operations to OBM, including the receivables for lots
already contracted and those yet to be sold. Subsequently, the Commercial Bank of Manila (CBM)
acquired the Xavierville Estate from OBM.
In a letter dated August 5, 1986, the CBM requested Perla Manalo to stop any on-going
construction on the property since it (CBM) was the owner of the lot and she had no permission for
such construction. She agreed to have a conference meeting with CBM officers where she informed
them that her husband had a contract with OBM, through XEI, to purchase the property. When asked
to prove her claim, she promised to send the documents to CBM. However, she failed to do so. On
September 5, 1986, CBM reiterated its demand that it be furnished with the documents promised, but
Perla Manalo did not respond.
On July 27, 1987, CBM filed a complaint for unlawful detainer against the spouses with the
MTC Court of Quezon City.
In the meantime, the CBM was renamed the Boston Bank of the Philippines. After CBM filed
its complaint against the spouses Manalo, the latter filed a complaint for specific performance and
damages against the bank before the RTC of Quezon City.
Boston Bank, now petitioner, maintains that, as held by the CA, the records do not reflect any
schedule of payment of the 80% balance of the purchase price, or P278,448.00. Petitioner insists that
unless the parties had agreed on the manner of payment of the principal amount, including the other
terms and conditions of the contract, there would be no existing contract of sale or contract to sell.

ISSUE: WON the manner of payment has been agreed upon and WON it is essential for there to be
an existing contract of sale or contract to sell
RULING: No, it was not agreed upon thus, there was no contract to sell
The Court agrees with petitioners contention 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 on the price of the property
sold, but also on the manner the price is to be paid by the vendee.
Under Article 1458 of the New Civil Code, 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. 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 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.
It is not enough for the parties to agree on the price of the property. The parties must 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.
In a contract to sell property by installments, it is not enough that the parties agree on the
price as well as the amount of downpayment. The parties must, likewise, agree on the manner of
payment of the balance of the purchase price and on the other terms and conditions relative to the
sale. Even if the buyer makes a downpayment or portion thereof, such payment cannot be considered
as sufficient proof of the perfection of any purchase and sale between the parties.
There is no showing, in the records, of the schedule of payment of the balance of the
purchase price on the property amounting to P278,448.00. The said parties confined themselves to
agreeing on the price of the property (P348,060.00), the 20% downpayment of the purchase price
(P69,612.00), and credited respondents for the P34,887.00 owing from Ramos as part of the 20%
downpayment. The determination of the terms of payment of the P278,448.00 had yet to be agreed
upon on or before December 31, 1972, or even afterwards, when the parties sign the corresponding
contract of conditional sale.
Jurisprudence is that 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.
Indeed, the parties are in agreement that there had been no contract of conditional sale ever
executed by XEI, OBM or petitioner, as vendor, and the respondents, as vendees.
Respondents failed to allege and prove, in the trial court, 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 respondents had intended to adopt such terms of payment relative to the sale of the two lots in
question. Habit, custom, usage or pattern of conduct must be proved like any other facts.
As a consequence, respondents and XEI (or OBM for that matter) failed to forge a perfected
contract to sell the two lots; hence, respondents have no cause of action for specific performance
against petitioner.
BRAVO-GUERRERO vs. EDWARD P. BRAVO
FACTS:
Spouses Mauricio and Simona Bravo owned 2 parcels of land measuring 287 and 291 square
meters and located in Makati City, Metro Manila. The Properties are registered under TCT Nos. 58999
and 59000 issued by the Register of Deeds of Rizal on 23 May 1958. The Properties contain a large
residential dwelling, a smaller house and other improvements.

Mauricio and Simona had three children - Roland, Cesar and Lily, all surnamed Bravo. Cesar
died without issue. Lily Bravo married David Diaz, and had a son, David B. Diaz, Jr. ("David Jr.").
Roland had six children, namely, Elizabeth Bravo-Guerrero, Edward, Roland, Senia, Benjamin, and
their half-sister, Ofelia.
Simona executed a General Power of Attorney ("GPA") on 17 June 1966 appointing Mauricio
as her attorney-in-fact. In the GPA, Simona authorized Mauricio to "mortgage or otherwise
hypothecate, sell, assign and dispose of any and all of my property, real, personal or mixed, of any
kind whatsoever and wheresoever situated, or any interest therein." Mauricio subsequently mortgaged
the Properties to the PNB and DBP for P10,000 and P5,000, respectively.
On 25 October 1970, Mauricio executed a Deed of Sale with Assumption of Real Estate
Mortgage conveying the Properties to vendees Roland A. Bravo, Ofelia A. Bravo and Elizabeth BravoGuerrero. The sale was conditioned on the payment of P1,000 and on the assumption by the
vendees of the PNB and DBP mortgages over the Properties.
As certified by the Clerk of Court of the Regional Trial Court of Manila, the Deed of Sale was
notarized by Atty. Victorio Q. Guzman on 28 October 1970 and entered in his Notarial Register.
However, the Deed of Sale was not annotated on TCT Nos. 58999 and 59000. Neither was it
presented to PNB and DBP. The mortage loans and the receipts for loan payments issued by PNB
and DBP continued to be in Mauricios name even after his death on 20 November 1973. Simona died
in 1977.
On 23 June 1997, Edward, represented by his wife, Fatima Bravo, filed an action for the
judicial partition of the Properties. Edward claimed that he and the other grandchildren of Mauricio and
Simona are co-owners of the Properties by succession. Despite this, petitioners refused to share with
him the possession and rental income of the Properties. Edward later amended his complaint to
include a prayer to annul the Deed of Sale, which he claimed was merely simulated to prejudice the
other heirs.
The trial court upheld Mauricios sale of the Properties to the vendees. The trial court ruled
that the sale did not prejudice the compulsory heirs, as the Properties were conveyed for valuable
consideration.
Citing Article 166 of the Civil Code, the Court of Appeals reversed trial courts decision and
declared the Deed of Sale void for lack of Simonas consent. It also found that there was insufficient
proof that the vendees made the mortgage payments on the Properties, since the PNB and DBP
receipts were issued in Mauricios name. The appellate court opined that the rental income of the
Properties, which the vendees never shared with respondents, was sufficient to cover the mortgage
payments to PNB and DBP.
ISSUE: WON the sale of the properties was simulated or void for gross inadequacy of price
RULING: No, the sale of the properties is not void either for being simulated or for inadequacy of
price.
.
Respondents, however, contend that the sale of the Properties was merely simulated. As
proof, respondents point to the consideration of P1,000 in the Deed of Sale, which respondents claim
is grossly inadequate compared to the actual value of the Properties.
Simulation of contract and gross inadequacy of price are distinct legal concepts, with different
effects. When the parties to an alleged contract do not really intend to be bound by it, the contract is
simulated and void. A simulated or fictitious contract has no legal effect whatsoever because there is
no real agreement between the parties.
In contrast, a contract with inadequate consideration may nevertheless embody a true
agreement between the parties. A contract of sale is a consensual contract, which becomes valid and
binding upon the meeting of minds of the parties on the price and the object of the sale. The concept
of a simulated sale is thus incompatible with inadequacy of price. When the parties agree on a price
as the actual consideration, the sale is not simulated despite the inadequacy of the price.
Gross inadequacy of price by itself will not result in a void contract. Gross inadequacy of price
does not even affect the validity of a contract of sale, unless it signifies a defect in the consent or that
the parties actually intended a donation or some other contract. Inadequacy of cause will not
invalidate a contract unless there has been fraud, mistake or undue influence. In this case,
respondents have not proved any of the instances that would invalidate the Deed of Sale.
Respondents even failed to establish that the consideration paid by the vendees for the
Properties was grossly inadequate. As the trial court pointed out, the Deed of Sale stipulates that, in

addition to the payment of P1,000, the vendees should assume the mortgage loans from PNB and
DBP. The consideration for the sale of the Properties was thus P1,000 in cash and the assumption of
the P15,000 mortgage.
Respondents argue that P16,000 is still far below the actual value of the Properties The tax
declarations placed the assessed value of both Properties at P16,160. Compared to this, the price of
P16,000 cannot be considered grossly inadequate, much less so shocking to the conscience as to
justify the setting aside of the Deed of Sale.
THE DIRECTOR OF LANDS, vs.ABARCA, ET AL
FACTS:
About fourteen years, the lot now in question was the subject of litigation between Datu
Bualan and his co-claimants, on the one hand, and Ciriaco Lizada, on the other. Juan A. Sarenas and
Domingo Braganza were the attorneys for Datu Bualan and his co-claimants in that suit, wherein a
judgment was rendered declaring Datu Bualan and his co-claimants the owners of the land involved in
the litigation.
Subsequently, a controversy arose between the Bagobos and their attorneys as to the
amount of fees due the latter, whereupon the attorneys took possession of the property now in
question. Action was brought by the Bagobos against their former attorneys for the recovery of the
land. In this action judgment was rendered ordering the attorneys to return the property seized by
them, and requiring the Bagobos to pay their former attorneys the sum of P6,000 as fees. As a result
of this judgment Datu Bualan and his co-claimants paid Sarenas and Braganza the sum of P5,126.13.
They also paid to the municipal treasurer of Davao in the name of Sarenas and Braganza, for taxes
and penalties due on the property in the year 1926, while the same was in the possession of the latter,
the sum of P1,035.87. The Bagobos assumed that, by these payments which amounted in all to
P6,162, the judgment rendered against them for P6,000 together with interests due thereon, was fully
satisfied.
Claiming that the sum paid to the municipal treasurer of Davao should not be credited on the
amount of the judgment obtained by them, Sarenas and Braganza caused the clerk of the court to
issue a writ of execution on the said judgment. By reason of the writ of execution so issued, the sheriff
levied on the property here in question and sold it to Sarenas and Braganza for the sum of P877.25.
Upon the failure of the Bagobos to redeem the property, they filed their claim in the present cadastral
case, alleging that they were the absolute owners of the lot in question.
In view of the evidence presented by the parties, the lower court dismissed the claim of
Sarenas and Braganza, and ordered the registration of the lot now in question in the names of Datu
Bualan and his co-claimants, subject, however, to a lien in favor of Sarenas and Braganza for the sum
of P877.25, with interest at the rate of 12 per cent per annum from April 27, 1927.
In dismissing the claim of Sarenas and Braganza, the lower court held that the sale by the
sheriff of the property in question in favor of said claimants was null and void, because the amount of
P877.25 paid by Sarenas and Braganza was absolutely inadequate.
ISSUE: WON a judicial sale of real property will be set aside when price is adequate
RULING: Yes if the price is so inadequate as to shock the conscience of the court.
The lower court was right in declaring the sheriff's sale null and void on the ground of the
inadequacy of the price paid. It appears that in 1927 the assessed value of the contested property
was more than P60,000. A judicial sale of real property will be set aside when the price is so
inadequate as to shock the conscience of the court. (National Bank vs. Gonzalez, 45 Phil., 693.)
In the instant case there is another important consideration. In fairness and equity, which after
all are the true aims of the law, the amount paid by Datu Bualan and his co-claimants for taxes and
penalties due on the contested property should be credited on the judgment obtained by Sarenas and
Braganza. Such taxes and penalties accrued while the property was in that possession under a claim
of ownership. It follows that the error assigned by Datu Bualan and his co-claimants against the
judgment below, to the effect that the lower court erred in subjecting the property sought to be
registered to a lien in favor of Sarenas and Braganza for P877.25 with interests, must be sustained.
TAYAG vs. LACSON
FACTS:

Respondents Angelica Tiotuyco Vda. de Lacson, and her children were the registered owners
of three parcels of land located in Mabalacat, Pampanga. The properties were tenanted agricultural
lands.
On March 17, 1996, a group of original farmers/tillers, Tiamson, et al., individually executed in
favor of the petitioner separate Deeds of Assignment in which the assignees assigned to the petitioner
their respective rights as tenants/tillers of the landholdings possessed and tilled by them for and in
consideration of P50.00 per square meter. The said amount was made payable "when the legal
impediments to the sale of the property to the petitioner no longer existed." The petitioner was also
granted the exclusive right to buy the property if and when the respondents, with the concurrence of
the defendants-tenants, agreed to sell the property. In the interim, the petitioner gave varied sums of
money to the tenants as partial payments, and the latter issued receipts for the said amounts.
On July 24, 1996, the petitioner called a meeting of the defendants-tenants to work out the
implementation of the terms of their separate agreements.
However, on August 8, 1996, the defendants-tenants, through Joven Mariano, wrote the
petitioner stating that they were not attending the meeting and instead gave notice of their collective
decision to sell all their rights and interests, as tenants/lessees, over the landholding to the
respondents Lacson.
On August 19, 1996, the petitioner filed a complaint against the defendants-tenants, as well
as the respondents, for the court to fix a period within which to pay the agreed purchase price of
P50.00 per square meter to the defendants, as provided for in the Deeds of Assignment.
Respondents as defendants asserted that they never induced the defendants Tiamson to
violate their contracts with the petitioner; and, being merely tenants-tillers, the defendants-tenants had
no right to enter into any transactions involving their properties without their knowledge and consent.
They also averred that the transfers or assignments of leasehold rights made by the defendantstenants to the petitioner is contrary to Presidential Decree (P.D.) No. 27 and Republic Act No. 6657,
the Comprehensive Agrarian Reform Program (CARP).
The defendants-tenants Tiamson, et al., alleged in their answer with counterclaim for
damages, that the money each of them received from the petitioner were in the form of loans, and that
they were deceived into signing the deeds of assignment. What they knew was that they were made
to sign a document that will serve as a receipt for the loan granted to them by the plaintiff.
ISSUE: WON the Deeds of Assignment are perfected option contracts
RULING: No, there is no perfected option contract.
The Court does not agree with the contention of the petitioner that the deeds of assignment
executed by the defendants-tenants are perfected option contracts. An option is a contract by which
the owner of the property agrees with another person that he shall have the right to buy his property at
a fixed price within a certain time. It is a condition offered or contract by which the owner stipulates
with another that the latter shall have the right to buy the property at a fixed price within a certain time,
or under, or in compliance with certain terms and conditions, or which gives to the owner of the
property the right to sell or demand a sale. It imposes no binding obligation on the person holding the
option, aside from the consideration for the offer. Until accepted, it is not, properly speaking, treated
as a contract. The second party gets not lands, not an agreement that he shall have the lands, but the
right to call for and receive lands if he elects. An option contract is a separate and distinct contract
from which the parties may enter into upon the conjunction of the option.
In this case, the defendants-tenants-subtenants, under the deeds of assignment, granted to
the petitioner not only an option but the exclusive right to buy the landholding. But the grantors were
merely the defendants-tenants, and not the respondents, the registered owners of the property. Not
being the registered owners of the property, the defendants-tenants could not legally grant to the
petitioner the option, much less the "exclusive right" to buy the property. As the Latin saying goes,
"NEMO DAT QUOD NON HABET."